Mining   Investments 

and 
How  to  Judge  Them 


By 
Francis  C.  Nicholas,  Ph.  D. 


Published  by 

The   Moody   Corporation 

35  Nassau  Street,  New  York 
1907 


Copyright,  1907.  by 
THE  MOODY  CORPORATION 
All  rights  reserved 


THE   MOODY-BARTON    PRESS 


Vrircf.  U3. 


CONTENTS 

Chapter  Page    i 

I.  The    Organization    and    Financial    De- 

velopment of  a  Mining  Company  .  .       7 
II.  The    Organization    and    Physical    De- 

velopment of  a  Mining  Company..     17 

III.  Why  Mining  Companies  Fail  ..........     27 

IV.  Success  in  Mining  ....................  .     35 

V.  The  Relation  of  Mining  Stocks  to  the 

Properties  Back  of  Them  ..........     41 

VI.  Speculative    and    Investment    Value    of 

Mining  Stocks  .....................     51 

VII.  The  Geology  of  a  Successful  Mine  .....     59 

VIII.  Physical  Conditions  Which  Should  Sur- 
round a   Successful   Equipment  for 
a   Mine  ............................     69 

IX.  Personal  and  Business  Organization  Re- 

quired to  Attain  Success  in  Mining.     79 
X.  Inquiries  Which  Should  be  Made  Before 

Accepting  a  Mining  Venture  .......     89 

XI.  Conditions     Under     Which     a     Mining 

Proposition  May  be  Accepted  ......   101 

XII.  Conditions     Under     Which     a     Mining 

Proposition  Should  be  Rejected....   109 

XIII.  Investments  in  Dividend  Paying  Mining 

Stocks   ............................  117 

XIV.  The  Spirit  of  Adventure  and   Specula- 

tion,   What    Some    Have     Gained; 
What  Others  Have  Lost  ......  ....   125 

XV.  The  Mining  Regions  of  the  World  and 

the  Opportunities  They  Offer  ......   133 

XVI.  The    Mining    Regions    of    the    United 

States    ............................  153 

XVII.  On   the   Trail   With   an   Honest,    Com- 
pared   With    the    Work    of    a    Dis- 
honest   Prospector  ....  .............   165 

XVIII.  The   Prospector   and   His   Agent,   Hon- 

est and  Dishonest  Work  Compared.   173 
XIX.  The     Prospector,     the     Promoter,     the 

Banker  and  the  Investor  ..........   181 

XX.  The  Trials  of  a  Mining  Engineer  ......   189 

XXI.  The  Gist  of  the  Whole  Matter  .........   199 

Appendix.  How  to  Calculate  the  Values  of  Min- 

ing   Stocks  ...........  .............  203 


\ 


PREFACE 

A  book  on  mining  stock  valuations  may  not 
be  scientific,  yet  it  can  fill  a  useful  place. 
Science  should,  and  does  have  for  its  principal 
object  the  attainment  of  information  and  data 
leading  to  utilities;  and  while  this  little  book 
cannot  claim  the  distinction  which  would  be 
accorded  to  a  learned  treatise  on  the  scientific 
aspect  of  mining,  yet  it  does  contain,  the 
author  hopes,  worthy  information  which  will 
be  of  practical  use, — resulting,  perhaps,  in  a 
better  understanding  of  what  mining  stocks 
really  represent  and  the  explanations  which 
may  be  entertained  in  regard  to  them. 

The  Author 


The  Organization  and  Financial  Develop- 
ment of  a  Mining  Company 

If  one  who  casually  buys  a  mining  stock,  be- 
lieving, so  he  says,  that  he  is  "stuck,"  yet 
hoping  that  the  reports  may  prove  true,  could 
know  all  the  struggle,  pathos,  hopes,  despair 
and  moments  of  triumph  attending  the  effort 
for  the  financial  development  of  a  mining  en- 
terprise; one  would  sympathize  with  the  pro- 
moter, and  wonder  at  the  determination,  which, 
if  success  is  to  be  obtained,  must  meet  and 
overcome  prejudices,  must  encounter  doubts, 
and  incredulous  disbelief  during  years  of  effort 
to  find  success  in  beating  down  all  barriers, 
and  obtaining  the  necessary  capital  to  operate 
the  mine.  One  who  is  strong  enough  to  obtain 
his  end  against  such  opposition  is  calculated 
to  succeed,  and  usually  does  make  a  success  of 
his  mine  after  obtaining  the  money  to  operate 
it.  There  is  pathos  and  sorrow  in  the  effort 
because  all  do  not  succeed,  even  though  a  life 
time  is  dedicated  to  the  effort.  One  instance 
comes  to  my  memory.  A  miner  prospecting 
7 


8  MINING  INVESTMENTS 

some  years  ago  discovered  a  mine,  and  thought 
it  a  good  one;  obtained  the  title  and  set  to 
work  to  raise  the  money  for  its  equipment,  but 
without  success.  The  mine  was  in  Central 
America,  a  place  not  too  well  esteemed,  and 
few  would  listen  to  his  story.  Yet  he  labored 
on,  he  and  his  wife  together.  Sometimes  they 
made  a  little  money  at  one  work  or  another, 
and  then  would  spend  it  looking  for  someone 
who  would  hear  their  story,  and  advance  the 
capital  required  to  work  the  mine.  Time  went 
by,  they  grew  old  together  and  died  in  want, 
and  the  mine  was  never  worked.  What  pathos 
of  hopes  and  disappointments  were  hidden  in 
these  wasted  lives  none  knew,  nor  is  this  an 
isolated  example.  Many  are  waiting,  working 
and  hoping  today;  some  will  succeed,  others 
are  doomed  to  disappointment;  but  they  will 
struggle  on,  for  the  mining  spirit,  like  the 
gambling  fever,  is  hard  to  subdue;  and  it  is 
all  so  plain  to  those  who  own  the  mines,  and 
feel  sure  as  to  their  worth,  that  it  seems  im- 
possible that  someone  will  not  harken,  and 
take  a  venture  with  them,  where  they  them- 
selves have  risked  their  all;  and  yet  how 
little  encouragement  is  found.  If  this  were 
different,  and  if  people  who  had  money  to  in- 
vest gave  better  heed  to  those  who  actually 
own  a  mine.,  and  sought  for  capital  to  estab- 


AND  HOW  TO  JUDGE  THEM  9 

lish  works  which  they  would  themselves  oper- 
ate, the  story  of  mining  would  be  very  differ- 
ent and  many  permanent  successes  would  be 
chronicled  each  year;  but  people  doubt  the 
miner,  who  with  blunt  story  and  rough  ways 
seeks  for  financial  help,  and  asks  for  partners 
to  share  in  his  venture.  So  the  mining  company 
and  its  financial  development  conies  on  the 
scene.  The  mine  owner,  weary  in  his  search, 
receives  offers  that  a  promoter,  banker,  broker, 
or  other  personage  will  take  up  his  proposition, 
provided  suitable  terms  are  arranged.  I  re- 
member well  how  one  old  prospector  replied 
to  such  a  proposition.  "She's  a  good  prospect, 
but  she  ain't  worth  no  million  dollars;  may 
be  when  she's  opened  up,  but  that's  not 
now."  "Precisely,"  the  promoter  said;  "we 
capitalize  the  prospective,  not  the  present 
worth  and  then  sell  shares  based  on  the  pres- 
ent worth  at  low  prices  which  advance  as 
values  are  developed;  those  who  put  their 
money  out  for  development  thus  reap  the  bene- 
fit, and  this  is  what  I  propose."  "Each  person 
who  invests  at  prospect  prices  in  a  capitaliza- 
tion for  prospective  worth  knows  that  if  our 
expectations  are  brought  to  realization  his 
profit  will  be  in  holding  a  great  number  of  our 
shares."  So  the  prospect  was  capitalized  for 
$1,000,000. 


18  MINING  INVESTMENTS 

This  was  the  first  step  in  the  financial  de- 
velopment of  the  mine.  When  a  proposition 
is  put  forward  on  this  basis  and  is  honestly 
managed,  the  proposition  is  fair,  but  unfortu- 
nately the  offering  is  not  always  justly  man- 
aged and  a  greater  value  is  placed  on  the  pres- 
ent worth  than  conditions  warrant;  and  here 
is  the  first  influence  which  makes  for  loss  in 
mining  stocks.  Capitalization  for  prospective 
worth,  but  the  price  representing  the  present 
worth,  the  money  asked  for  the  shares,  is  often 
more  than  actual  present  worth  will  warrant. 

If  a  prospect  is  worth  $10,000  and  the  com- 
pany owning  the  prospect  is  capitalized  for 
$1,000,000  then  the  present  actual  worth  of 
shares  is  1  % ;  and  if,  as  usual,  the  par  value  of 
the  shares  is  $1.00  then  the  actual  worth  is  just 
one  cent  a  share,  and  on  such  a  basis,  and  at 
such  a  price  would  be  well  worth  buying;  but 
this  investment  would  be  in  nothing  more  than 
a  prospect,  and  except  the  shareholders  or 
partners,  for  such  they  really  are,  spend  some- 
thing on  the  mine  to  open  it  for  operation ;  and 
then  provide  machinery  to  treat  the  ore,  it  will 
remain  a  prospect  worth  just  one  cent  a  share 
and  nothing  more.  This  is  not  good  business, 
and  one  goes  at  hazard  in  a  mine  to  make  a 
profit,  not  to  hoard  money,  so  funds  must  be 
provided  to  operate  and  work ;  and  this  brings 


AND  HOW  TO  JUDGE  THEM  11 

forward  the  next  step  in  the  financial  develop- 
ment of  a  mining  company. 

The  miner  being  asked  as  to  the  division  of 
the  shares  naturally  replies  that  being  partners 
he  and  the  promoter  should  divide,  but  this  is 
not  a  satisfactory  basis  for  those  proposing  to 
promote  the  scheme:  explanation  is  made 
that  in  order  to  raise  money  shares  must  be 
sold,  and  that  some  must  be  donated  to  the 
treasury  for  purposes  of  development;  so  after 
much  discussion  it  is  generally  agreed  that  of 
the  shares,  one-third  shall  go  to  the  owner, 
the  promoters  take  a  third,  and  one-third 
is  placed  in  the  treasury;  the  old  miner, 
doubtful  as  to  what  he  had  done  takes  his 
paper,  yields  his  titles  to  the  company,  and 
goes  back  to  the  mine;  the  promoters  under- 
taking to  produce  funds  by  selling  treasury 
stock  to  keep  him  at  work. 

This  is  now  the  situation,  a  prospect  worth 
in  cash  $10,000  has  been  capitalized  at  $1,000,- 
000,  and  one-third  of  the  shares  must  provide 
all  the  money  for  operation  and  development. 
In  ordinary  business  a  person  contributing  the 
total  capital  might  be  contented  with  one-third 
the  profits,  but  would  probably  ask  more  and 
would  control  whatever  property  the  business 
owned.  In  mining  similar  arrangements 
should  be  made,  and  they  who  contribute  capi- 


12  MINING  INVESTMENTS 

tal  should  not  only  be  preferred  in  shares  and 
dividends,  but  should  be  given  actual  liens  upon 
the  property  to  make  their  preferences  secure. 
This  is  not  often  done  because  it  is  of  little  ad- 
vantage to  promoters,  and  the  offerings  are  of 
shares  alone,  usually  appearing  with  glowing 
prospects,  and  the  statement  that  so  many 
shares  are  in  the  treasury  to  be  sold  at  a  low 
price,  probably  twenty-five  cents  a  share. 
Frequently  the  announcement  is  made  with 
great  show  of  virtue  that  no  officer  receives 
compensation  for  his  work,  a  suspicious  cir- 
cumstance, because  men  cannot  afford  to  work 
for  nothing,  and  do  not  work  for  nothing  even 
in  a  mine.  It  is  a  better  proposition  when  those 
who  promote  state  exactly  what  they  have  as 
profit,  and  better  yet  when  a  mining  company 
pays  its  officials  and  obtains  men  competent  to 
do  successfully  the  work  required  of  them. 

There  seems  a  tendency  among  mining  pro- 
moters to  pose  as  philanthropists,  who  work 
for  nothing,  and  with  the  mining  proposition 
under  discussion  the  usual  offerings  appear; 
the  miner  has  gone  back  to  his  mine  now  in- 
corporated, and  obedient  to  instructions  writes 
glowing  letters,  his  own  enthusiasm  develop- 
ing more  and  more.  What  he  writes  is 
quoted,  and  the  shares  begin  to  sell,  not  very 
freely,  because  they  never  do;  and  the  pro- 


AND  HOW  TO  JUDGE  THEM  13 

moters,  in  order  that  sales  might  be  made  in 
greater  volume,  offer  large  commissions,  incur 
expenses  and  offer  special  terms,  so  that  in  the 
end  often  not  more  than  one-third  of  the  money 
realized  for  shares  goes  to  operate  the  mine; 
and  this  small  proportion  has  to  do  the  work  in 
which  all  the  great  number  of  shares  have 
equal  participation.  If  of  the  treasury  shares 
one-third  are  sold  at  twenty-five  cents  each,  and 
one-third  the  money  realized  is  put  to  actual 
work  in  mine,  then  the  money  so  placed  would 
represent  about  two  and  eight-tenths  per  cent, 
of  the  capitalization;  this,  with  the  one  per 
cent,  which  the  prospect  was  actually  worth 
at  the  beginning  makes  an  aggregate  of  three 
and  eight-tenths  per  cent,  actual  value,  real 
money,  in  the  proposition,  and  this  small  per- 
centage must  earn  dividends  for  the  total  capi- 
talization. So  if  the  old  miner  is  not  mistaken 
in  his  mine,  and  it  does  yield  shipping  ore  from 
which  a  profit  can  be  made,  the  mine  must  re- 
turn in  profits  nearly  200  %  each  year  on  the 
money  actually  in  the  proposition  in  order  to 
pay  6%  on  the  capitalization.  There  are  many 
propositions  which  do  as  well  as  this,  but  the 
rocks  of  disaster  are  never  very  far  away; 
funds  are  apt  to  run  low,  leaving  the  enterprise 
not  wrecked  but  stranded;  and  another  is 


14  MINING  INVESTMENTS 

added  to  the  long  list  of  mines  owned  by  corpo- 
rations, but  not  in  operation. 

The  promoters  were  eager  for  very  great 
profits,  if  the  mine  had  paid,  as  they  anticipated 
from  the  very  start,  all  would  have  been  well; 
but  the  financial  development  of  the  propo- 
sition not  being  on  a  secure  foundation,  nothing 
was  provided  for  contingencies,  and  troubles 
appearing,  the  burden  of  the  capitalization  was 
too  great.  This  is  the  history  of  most  mining 
enterprises,  though  some  succeed,  even  at  this 
great  disadvantage,  and  if  better  provision 
were  made,  the  number  of  successes  would  be 
in  favorable  comparison. 

These  are  the  usual  conditions  of  most  min- 
ing propositions  though  not  all ;  many  are  well 
organized,  and  the  investor  should  learn  to 
select  those  which  are  organized  on  proper 
lines,  and  to  show  what  these  lines  of  proper 
organization  may  be  is  the  object  of  the  fol- 
lowing chapters. 

It  does  not  cost  much  to  put  forward  a  min- 
ing proposition,  and  where  expenses  of  pro- 
motion are  deducted  from  the  treasury  stock 
the  promoters  take  but  little  risk ;  a  risk  which 
may  not  exceed  the  figures  in  the  following 
calculation  of  expenses  for  bringing  out  a  min- 
ing proposition  at  one  million  dollars  capitali- 
zation. 


AND  HOW  TO  JUDGE  THEM  IS 

Calculation  of  minimum  expenses  in  bring- 
ing out  a  mining  stock. 

Charter,  in  one  of  the  cheaper  states. .  $25.00 

Stock  book,  ledger  and  seal 10.00 

Printing  the  prospectus,  1,000  copies. .  25.00 
Advertising  at  $25.00  per  week  for  one 

month  100.00 

Postage  and  office  rent  (frequently  desk 

room)    25.00 


Total $200.00 

One  month's  expenses,  after  which  it  is  ex- 
pected that  money  will  be  coming  in.  If  the 
stock  sells  the  promoters  make  a  big  profit, 
and  the  mine  is  operated;  if  the  stock  does 
not  sell  the  loss  to  the  promoters  is  not  great 
and  they  can  try  again  with  some  new  propo- 
sition. 

With  such  excellent  prospects  for  a  profit, 
with  mine  owners  grown  weary  looking  for 
partners  to  do  actual  mining,  with  mines  and 
prospects  to  be  had  for  shares  in  the  companies 
incorporated  to  take  them  over,  it  is  little  won- 
der that  mining  promoters  are  many ;  yet  min- 
ing pays  such  splendid  returns  that  even  with 
the  great  disadvantages  attending  the  Ameri- 
can system  of  company  promotions,  among 
the  many  who  buy  mining  stocks  thousands 


16  MINING  INVESTMENTS 

make  handsome  returns,  and  win  fortunes  out 
of  such  investments ;  and  the  desirable  position 
for  an  investor  is  to  learn  how  to  discrimin- 
ate and  select  the  good  from  the  bad;  because 
there  are  desirable  mining  propositions  brought 
forward  constantly,  and  money  is  to  be  made 
if  only  one  uses  good  judgment  in  selecting. 

These  statements  are  not  idle  words.  It  is  a 
too  frequent  occurrence  in  the  financial  de- 
velopment of  a  mining  company  that  of  the 
money  subscribed  an  adequate  proportion  does 
not  go  into  the  property,  and  the  shares  sold 
for  cash  are  far  in  the  minority,  a  basis  not 
calculated  to  be  of  advantage  to  those  who  in- 
vest; and  one  should  look  well  to  this  point 
before  purchasing.  It  is  like  having  too  many 
partners  who  have  not  contributed  any  cash 
to  the  business,  and  if  such  a  proposition  is 
offered  the  investor  should  demand  that  the 
mine  be  pledged  as  security  for  the  money 
actually  contributed. 

When  it  is  found  that  a  proposition  is  not 
over-burdened  with  promoters'  shares  in  its 
financial  development,  or  that  those  who  are 
promoting  the  enterprise  are  giving  full  value 
for  what  they  reserve  for  themselves  in  shares, 
then  the  financial  proposition  is  on  a  fair  basis 
and  can  so  far  be  considered  favorably. 


II 

The  Organization  and  Physical  Develop- 
ment of  a  Mine 

It  takes  money  to  work  a  mine,  it  takes 
money  for  the  equipment;  but  those  who 
manage  a  mine,  and  yet  are  not  accustomed  to 
the  business  think  that  no  impediment  stands 
against  the  easy  money  they  expect  to  win. 
Take  out  the  ore  and  remit  the  proceeds,  write 
the  directors;  this  is  the  sense  of  the  meeting, 
and  the  puzzled  miner  looks  at  his  instructions 
and  sends  some  practical  suggestions  as  to  the 
best  methods  for  opening  up  the  mine,  and  the 
machinery  which  will  probably  be  required. 
The  directors  hold  a  meeting  and  generally  re- 
solve with  great  show  of  wisdom  to  send  ma- 
chinery without  delay,  effort  is  made  to  raise 
more  money  through  the  sale  of  stock,  or  if 
money  is  in  the  treasury  it  is  at  once  appropri- 
ated; people  who  have  machinery  to  sell  are 
called  in  consultation;  and  the  next  thing  an 
equipment  is  sent  out  to  the  puzzled  miner, 
and  word  goes  too  that  it  must  be  placed  in  po- 
sition, without  delay,  and  returns  sent  in.  It 

17 


18 


is  returns,  money  coming  in,  that  the  directors 
want  to  see ;  the  stockholders  expect  dividends, 
hurried  calls  are  sent  to  the  manager ;  but  all  in 
vain,  such  is  not  the  way  to  operate  a  mine, 
failure  almost  certainly  comes  to  oppress, 
and  once  a  mining  company  has  failed  there  is 
poor  chance  of  re-establishing  the  enterprise. 
That  disaster  follows  too  hasty  effort  at  results 
is  because,  before  the  character  of  the  ore  is 
known,  before  its  proper  treatment  has  been 
ascertained,  and  often  times  before  the  mine  is 
even  opened,  machinery  has  been  bought  and 
shipped;  the  directors  expecting  it  will  fit  re- 
quirements, and  hazarding  the  money  on  a 
guess  are  generally  obliged  to  meet,  and  to  ex- 
plain the  disappointments;  because  machinery 
bought  in  this  haphazard  way  can  hardly  be 
expected  to  give  good  results. 

An  incident  of  such  work  as  this  can  be 
found  in  numerous  mines.  One  which  has  for 
some  years  past  been  prominently  before  the 
public  is  a  good  example.  It  was  a  prospect, 
and  as  such  had  merit,  but  neither  the  charac- 
ter of  the  ore,  the  amounts  to  be  obtained  or 
the  physical  requirements  had  been  well  es- 
tablished ;  yet  beneath  the  magic  touch  of  capi- 
tal great  undertakings  were  commenced,  men 
swarmed  about  the  property,  shafts  were  sunk, 
electric  plants  gave  light  in  all  the  galleries 


AND  HOW  TO  JUDGE  THEM  19 

under  ground,  mills  were  in  process  of  erec- 
tion, houses,  railway  sidings,  everything  which 
engineering,  directed  by  those  who  had  ma- 
chinery to  sell,  could  devise  was  being  done; 
and  after  thousands  had  been  spent  it  de- 
veloped that  the  machinery  was  not  suited  to 
the  ore,  then  other  plans  were  tried;  new 
equipment  recommended  by  those  who  had 
machinery  to  sell  was  purchased.  Three  times 
were  failures  the  sole  reward  for  thousands 
spent,  and  the  mine  was  brought  to  such  an 
ill  repute  that  where  a  good  result  might  easily 
have  been  attained,  were  debts,  a  property  in- 
volved, machinery  of  little  use;  and  all  just 
struggling  to  be  maintained.  Then  one  of  the 
directors,  prominent  in  business  life,  admitted 
that  he  was  a  fool,  that  is,  when  it  came  to  min- 
ing propositions;  and  so  he  was,  and  so  are 
most  men  who,  as  directors  of  mining  enter- 
prises, force  the  issue,  seek  quick  returns  and 
vote  to  build  and  establish  equipment  before 
the  mine  is  opened.  Luck  may  be  with  them, 
and  by  chance  the  equipment  may  be  suited  to 
the  requirements  of  the  ore,  but  usually  luck 
leads  a  man  astray,  and  when  an  investor  hears 
of  rapid  work  of  equipment  and  development 
going  hand  in  hand,  it  will  be  safe  to  let  such 
propositions  go  to  others ;  for  where  good  min- 
ing practice  is  not  well  maintained  the  chances 


20  MINING  INVESTMENTS 

of  success  are  very  poor.  Naturally  one  may 
inquire,  what  is  good  mining  practice?  This 
question  does  not  admit  of  easy  answer,  for 
no  two  mines  are  found  the  same,  and  what  is 
good  practice  in  one  would  probably  lead 
to  disaster  in  another.  Yet  certain  general 
principles  can  be  considered  as  bearing  on  the 
question,  and  these  being  understood  the  en- 
quirer can  form  an  opinion  as  to  whether  the 
organization  and  physical  development  of  the 
mine  is  proceeding  as  it  should. 

Mines  may  be  divided  into  three  classes. 

First,  those  which  produce  ores  very  high 
in  value,  with  every  ounce  of  ore  worth  care- 
ful handling. 

Second,  those  yielding  rich  ores  and  by  their 
indications  promising  supplies  of  mineral 
which  can  be  milled  to  certain  profit. 

Third,  mines  which  yield  a  low  grade  of  ore 
from  which  a  profit  can  be  had,  if  the  product 
can  be  treated  to  advantage. 

Then  there  is  another  class  of  mining  propo- 
sitions, prospects,  indicating  that  by  opening 
up  the  ground  mineral-bearing  deposits  will 
be  found. 

Each  class  of  mines  requires  different  treat- 
ment. Those  which  yield  such  rich  ores 
that  every  ounce  is  worth  careful  handling 
are  rare  and  the  best  practice  is  to  take  the 


AND  HOW  TO  JUDGE  THEM  21 

course  usually  recommended  by  boards  of  di- 
rectors not  skilled  in  mining  and  get  ore,  not 
with  such  eagerness,  however,  that  mining 
operations  are  so  conducted  that  future  work 
must  be  more  and  more  expensive ;  but  get  ore 
without  too  much  regard  for  future  operations, 
because  such  mines  usually  do  not  last  long; 
and  though  some  do  continue  to  great  depth  it 
may  be  taken  as  a  rule,  to  which  there  are  some 
exceptions,  that  very  rich  mines  do  not  last  so 
long  as  others,  and  the  best  practice  is  to  make 
a  drive  for  all  that  can  be  had  in  values  with- 
out great  equipment.  When  such  a  proposition 
is  presented  it  is  fair  to  take  a  chance  on  it,  if 
the  capitalization  is  not  high ;  but  where  a  rich 
ore  is  reported  running  into  the  hundreds  or 
even  thousands  to  the  ton  and  a  great  equip- 
ment is  proposed,  that  proposition  is  safe  to 
let  alone,  because  the  chances  are  that  the  ore 
obtained  will  not  be  worth  the  cost  of  the 
equipment.  Of  course,  there  are  exceptions, 
but  chance  rules  in  mines  and  the  chances  are 
that  a  very  rich  mine  cannot  be  a  big  mine  and 
therefore  a  big  equipment  will  be  out  of  place. 
The  second  class,  those  mines  which  yield 
good  ores,  require  very  different  treatment, 
and  from  the  viewpoint  of  a  stockholder,  the 
following  steps  should  be  taken  as  good  min- 
ing practice. 


22  MINING  INVESTMENTS 

At  the  beginning  of  the  proposition,  while 
the  mine  is  still  an  undeveloped  prospect,  the 
shares  should  be  sold  at  a  low  rate,  and  the 
money  obtained  applied  to  work  of  develop- 
ment; not  to  the  purchase  of  machinery  or  to 
arrangements  for  selling  ore,  but  to  develop- 
ment work  and  nothing  else.  The  shares  should 
advance  in  price  as  this  work  progresses,  and 
the  presence  of  ore  bodies  is  established  and 
ore  reserves  are  blocked  out;  that  is,  opened 
by  first  sinking  down  a  shaft  near  the  vein,  and 
at  a  certain  depth  cross-cutting  by  digging  a 
tunnel  from  the  bottom  of  the  shaft  to  where 
the  vein  should  be;  and  then  finding  the  vein 
as  expected,  drifting,  that  is,  tunneling  along 
it;  then  an  assured  expectation  can  be  enter- 
tained that  the  vein  found  on  the  surface  and 
encountered  again  by  tunneling  from  the  bot- 
tom of  the  shaft  extends  from  the  surface  down 
to  where  it  has  been  encountered,  all  ore,  a 
body  opened  up  and  ready  to  be  taken  out. 
This  practice  may  be  varied,  but  the  principle 
is  the  same,  the  operations  should  be  to  prove 
up  a  large  body  of  ore  before  going  to  the  ex- 
pense of  erecting  machinery.  Sometimes  the 
mine  is  so  formed  that  the  shaft  can  be  run 
directly  on  the  vein  itself,  a  very  satisfactory 
method  of  proving  ore  when  it  can  be  done  to 
advantage ;  but  usually  the  shaft  is  placed  near 


AND  HOW  TO  JUDGE  THEM  23 

the  vein  and  no  attempt  is  made  at  burrowing, 
that  is,  following  the  irregularities  of  a  mineral 
formation  for  the  sake  of  always  working  in 
the  ore.  This  is  not  now  well  regarded,  al- 
though it  was  the  ancient  practice. 

In  other  mines,  where  the  mineral  deposits 
are  found  high  among  the  mountains,  the  situ- 
ation admits  of  tunneling  to  reach  the  vein, 
rather  than  sinking  down  a  shaft  beside  it,  but 
the  principle  is  the  same,  the  object  being  to 
open  up  and  prove  the  presence  of  the  ore  from 
the  top,  or  outcropping  of  the  mine,  to  the 
Jjlace  at  depth  where  the  vein  is  cut;  and 
having  established  that  an  abundance  of  the 
ore  is  there,  the  next  step  is  to  equip  the  mine 
with  machinery  to  treat  the  ore.  Good  prac- 
tice is  to  make  careful  test,  and  when  a  plan  for 
treatment  has  been  satisfactorily  proven  the 
plant  can  be  purchased  with  assurance  that 
the  mine  will  be  successfu1 

Where  a  proposition  is  presented  under  con- 
ditions of  operation  as  here  outlined,  it  is  a  fair 
risk  to  take  a  chance,  provided  that  the  price  is 
right.  At  first,  before  the  mine  is  opened,  the 
share  should  be  very  cheap  because  everything 
is  risk,  and  if  enough  shares  are  not  sold  the 
mine  may  never  be  opened  up  at  all.  Then,  as 
the  work  proceeds,  there  should  naturally  be  a 
gradual  advance  'm  the  price  asked  for  the 


24  MINING  INVESTMENTS 

shares,  particularly  so  if  proofs  of  mineral  to  be 
found  at  depth  are  brought  to  light;  until, 
when  the  ore  is  found  at  depth  there  should  be 
a  material  advance;  and  when  the  ore  bodies 
have  been  drifted  on,  and  proven  as  to  ex- 
tent a  good  price  should  be  asked  for  the 
shares.  Finally  when  the  equipment  has 
been  put  in  place  and  the  mine  is  set  to  earn- 
ing dividends  a  high  price  should  be  asked  and 
will  be  had,  because  then  everybody  wants  the 
investment;  and  those  who  took  the  risk  at 
first,  and  would  have  met  a  total  loss  if  ore  had 
not  been  found  at  depth  now  have  their  reward. 

Sometimes  long  periods  pass  in  development 
work;  often  it  is  carried  on  too  far,  and 
when  once  a  paying  ore  deposit  is  encountered, 
it  should  be  operated,  because  the  object  of 
mining  is  not  to  develop  a  fine  engineering 
plant,  but  to  get  ore  and  get  it  with  the 
least  possible  expense.  This  being  held  in 
mind,  it  is  fair  to  take  a  chance  in  mining 
where  good  prospects  are  reported  on  the 
authority  of  one  who  knows  what  indications 
really  promise  good  prospects,  and  those  in 
charge  of  the  proposition  propose  good  mining 
practice. 

In  the  third  group  or  class  of  mines,  where 
lower  grade  ores  are  found,  good  practice  is 
the  same  as  has  been  stated,  but  it  must  be  car- 


AND  HOW  TO  JUDGE  THEM  25 

ried  out  with  greater  care,  because  the  equip- 
ment required  to  make  money  out  of  low  grade 
ores  is  very  costly.  Much  money  must  be 
raised,  and  before  such  large  amounts  are 
risked  the  presence  of  a  very  great  deposit  of 
the  ore  must  be  established;  and  the  mine 
opened  up,  and  proved  at  several  different 
points  and  places,  to  establish  beyond  perad- 
venture  that  great  bodies  of  ore  are  at  hand  to 
supply  the  extensive  plant  which  must  be  oper- 
ated to  make  money  out  of  low  grade  ores. 

With  mines  in  prospect,  that  is,  mineral 
ground  where  ore  deposits  are  expected,  but 
are  not  certainly  known  to  exist,  all  is  specu- 
lation, and  usually  the  chance  is  poor  and  safe 
to  let  alone.  However,  as  sometimes  strikes 
are  made,  and  prospects  worth  but  a  few  cents 
a  share  advance  to  dollar  values  over  night, 
some  people  will  be  willing  to  accept  the  risk, 
and  if  the  shares  are  cheap  enough  it  is  a  fair 
gamble,  nothing  more;  yet  if  the  management 
is  honest  and  their  plans  for  exploration  vigor- 
ously prosecuted,  the  risk  can  be  taken,  but 
only  at  such  prices  that  if  the  mine  wins  out 
the  profit  will  be  manyfold  the  money  put  at 
risk. 

These  general  statements  give  but  an  outline 
of  the  different  questions  involved  in  the  physi- 
cal development  of  a  mine.  Incomplete  cer- 


26  MINING  INVESTMENTS 

tainly,  but  if  the  proposition  is  looked  at  with 
critical  analysis  along  the  line  of  inquiry  here 
suggested  an  accurate  opinion  can  be  formed 
as  to  whether  the  physical  development  of  the 
mine  is  proceeding  along  lines  which  indicate 
success. 


Ill 

Why  Mining   Companies   Fail 

The  admission  must  be  made  with  regret 
that  most  mining  companies  are  failures,  but 
while  this  is  true  of  mining  it  is  also  true  of  all 
companies;  for  the  records  show  that  some 
ninety  per  cent,  of  corporations  are  failures, 
and  go  out  of  existence,  many  of  them  after 
only  a  year's  existence.  This  being  the  fact  it 
must  be  admitted  that  failures  in  mining  are 
not  more  frequent  than  among  ordinary  corpo- 
rations; still  the  fact  remains  that  most  min- 
ing companies  are  failures,  a  large  majority  of 
them;  which  in  the  aggregate  represent  the 
hopes  of  thousands  come  to  naught.  Why  this 
should  be  when  mining  is  such  a  profitable 
business  seems  strange,  for  one  would  think 
that  records  of  successes  would  be  more  pro- 
nounced, and  must  look  with  interested  con- 
cern at  the  causes  which  produce  such  bad  re- 
sults. The  reasons  why  are  many,  and  those 
who  hold  mining  stocks  should  take  heed  of 
these  reasons,  and  perhaps  discern  approaching 
failure  in  time  to  protect  their  holdings.  Of 

27 


28  MINING  INVESTMENTS 

the  reasons  why  mining  companies  fail,  one,  a 
potent  reason,  is  scarcely  known.  It  happens 
many  times  that  the  stockholders  bring  about 
the  ruin  of  their  own  interests,  and  put  bur- 
dens on  the  efforts  of  those  who  have  the  en- 
terprise in  charge  which  doom  the  company 
to  certain  failure.  Rarely  it  happens  that 
the  progress  of  a  mine  is  up  to  expecta- 
tions, delays  and  difficulties  are  almost 
sure  to  be  encountered;  and  then  comes  criti- 
cism, and  they  who  own  the  shares  bewail  their 
disappointment,  and  declare  they  have  been 
cheated,  denouncing  often  that  the  undertaking 
is  a  fraud,  and,  bringing  it  in  ill  repute,  make 
further  progress  well  nigh  an  impossibility; 
and  the  enterprise  discredited  becomes  a  dis- 
mal failure,  where  a  good  word  in  support  of 
those  who  had  the  enterprise  in  charge  might 
have  brought  about  a  great  success.  If  a  man- 
agement is  found  to  be  dishonest,  those  who 
have  bought  the  stock  should  lose  no  time  in 
taking  legal  action,  and  not  be  content  with 
idle  words  of  disapproval.  Where  a  manage- 
ment is  found  to  be  just,  and  making  due  effort 
to  attain  success,  even  though  disappointments 
are  encountered,  that  management  should 
have  a  good  word  now  and  then  to  help  their 
efforts,  and  it  is  a  poor  man  who  speaks  badly 
of  that  which  he  owns  himself;  if  he  does 


AND  HOW  TO  JUDGE  THEM  29 

so,  he  should  not  expect  anything  but  deterior- 
ation in  the  values  of  his  property. 

Here  are  some  of  the  reasons  why  stock- 
holders become  dissatisfied  and  criticise.  Re- 
sults may  not  be  quick  enough  to  suit  them 
for  which  the  management  is  frequently  de- 
nounced. It  may  be  that  some  who  have  taken 
a  chance  on  an  unestablished  mine  at  a  low 
rate  wish  to  sell  out  their  holdings,  and  in  place 
of  looking  for  a  purchaser  go  to  the  manage- 
ment demanding  that  the  stock  be  immediately 
repurchased  from  them;  forgetting  that  those 
who  have  gone  in  together  to  prove  up  an  un- 
tried mine  are  in  fact,  if  not  in  law,  partners, 
the  money  which  has  been  subscribed  must 
be  applied  for  work  on  the  mines  to  benefit 
them  all,  and  that  managers  who  are  so  en- 
gaged have  not  the  time  to  leave  their  work 
and  hunt  up  a  purchaser;  then  it  may  be  that 
the  mine  requires  all  the  money  which  the 
managers  can  raise,  and  to  divert  some  of  this 
money  to  repurchasing  shares  which  holders 
may  wish  to  sell  might  work  serious  injury  to 
those  who  are  not  seeking  to  dispose  of  what 
they  hold.  For  these  reasons,  while  a  mine 
is  going  through  its  stages  of  development 
those  who  buy  should  do  so  with  the  full  un- 
derstanding that  such  shares  bought  at  low 
prices  must  be  held  and  put  away  till  the  mine 


30  MINING  INVESTMENTS 

has  been  developed,  then,  of  course,  shares  can 
be  freely  sold. 

This  cause  of  failure,  the  denouncements  of 
those  who  have  purchased  stock,  is  one  far 
reaching  cause  why  mining  enterprises  fre- 
quently end  in  disaster,  because  when  once 
adverse  criticism  is  in  circulation  the  manage- 
ment can  no  longer  sell  shares  to  keep  up  the 
work,  and  then  the  enterprise  becomes  a  fail- 
ure. 

Another  among  other  many  causes  leading 
on  to  failure  is  that  competent  engineers  are 
not  employed.  Probably  no  cause  is  more  pro- 
lific in  unfortunate  results.  A  miner  once  said 
to  me  that  when  a  man  had  made  a  failure  at 
everything  else  he  took  up  mining,  and  soon 
considered  himself  an  expert.  This  is  a  good 
criticism,  but  the  man  who  made  it  was  him- 
self a  most  outrageous  failure,  and  well  illus- 
trates the  criticism.  He  was  pleasant,  aggres- 
sive, a  talker,  knew  it  all  and  more ;  persuaded 
people  to  place  money  with  him  and  then  ob- 
tained for  them  no  results  of  any  kind,  not  even 
a  property  held  under  title.  Here  we  have  a 
frequent  cause  for  failure,  and  if  those  who 
thought  of  buying  mining  stocks  would  assure 
themselves  that  those  who  were  to  have  the 
management  were  competent  there  would  be 
few  bad  investments  made  in  mining. 


AND  HOW  TO  JUDGE  THEM  31 

As  stated  in  a  previous  chapter  on  over  capi- 
talization where  less  than  a  due  proportion  of 
the  stock  is  represented  by  cash,  or  real  prop- 
erty, tends  to  make  mining  unprofitable  for 
those  who  have  invested.  Frequently  we  hear 
that  such  or  such  a  mine  is  making  money,  but 
the  capitalization  is  so  high  that  nothing  can 
be  paid  in  dividends;  a  condition  which  may 
continue  during  many  years,  and  such  a  mine 
cannot  be  spoken  of  as  a  success.  This  adverse 
condition  of  over  capitalization  should  be 
counterbalanced  by  security  on  the  property 
itself  with  preferences  for  interest  for  the  bene- 
fit of  those  who  may  invest  money  in  the  enter- 
prise. 

Among  the  causes  which  lead  on  to  failure 
a  form  of  dishonesty  called  "graft"  in  current 
slang  is  very  potent,  and  hard  for  stockholders 
to  control;  perhaps  it  never  will  be  held  in 
check,  and  it  is  mingled  with  all  the  forms  of 
dishonesty  which  may  be  practiced  in  a  busi- 
ness such  as  mining  while  the  enterprise  is 
being  organized  where  at  the  start  untried  men 
and  unestablished  usages  are  brought  together, 
new  equipment,  new  accounts,  everything  un- 
tried; it  is  small  wonder  that  efficiency  of  re- 
sults are  often  low  and  that  at  a  time  when 
mistakes  are  apt  to  bring  on  a  disaster  money 
misapplied  means  ruin.  Dishonesty  is  very 


32  MINING  INVESTMENTS 

prone  to  visit  all  human  affairs,  and  as  yet  no 
really  well  established  form  of  checking  up 
against  it  has  been  developed;  yet  in  mining 
it  could  be  done  if  the  stockholders  gave  more 
attention  to  their  own  interests,  and  had  in- 
dependent auditing  committees  which  might 
call  for  reports  at  any  time,  and  make  actual 
physical  inspections,  employing  competent 
engineers  to  give  them  information  as  to  what 
the  true  conditions  might  be  on  a  mine,  then 
there  would  be  very  few  losses  from  misappli- 
cation of  the  funds.  Unfortunately  stock- 
holders are  so  indifferent  that  there  is  small 
chance  that  auditing  at  sudden,  and  unexpected 
times  will  become  the  custom;  and  inefficient 
application  or  perhaps  misappropriation  of 
funds  will  always  be  a  potent  factor  among  the 
causes  why  a  mine  is  not  brought  to  success. 
To  watch  this  condition  is  not  easy,  but  where 
it  is  found  that  promised  results  are  not  ob- 
tained, and  the  management  cannot  give  a 
good  reason  why  this  is  so,  the  stockholders 
should  take  steps  to  have  committees  formed 
to  make  investigations,  and  if  necessary  place 
a  new  management  in  charge. 

Another  very  frequent  cause  for  disappoint- 
ment of  results  is  that  machinery  set  up  to  do 
the  work  of  winning  values  from  the  ore  will 
not  give  such  returns  as  were  expected,  and 


AND  HOW  TO  JUDGE  THEM  33 

frequently  the  enterprise  must  then  be  aban- 
doned or  closed  out  to  other  people  because 
lack  of  funds  will  not  permit  the  management 
to  purchase  and  set  up  other  kinds  of  ma- 
chinery. Against  this  difficulty  a  prospective 
stockholder  has  poor  opportunity  for  protec- 
tion, and  can  only  ascertain  that  the  plans  for 
treatment  of  the  ore  were  drawn  up  by  men 
who  are  competent  in  such  work,  and  who  are 
not  themselves  interested  in  selling  machinery 
on  which  they  reap  a  special  profit. 

To  all  these  causes  why  a  mine  may  fail 
there  is  the  ever  present  possibility  that  the 
ore  may  not  hold  out,  that  its  character  may 
change  and  not  be  suitable  for  treatment  with 
the  machinery  which  has  been  established ;  but 
where  the  mining  practice  has  been  good  the 
loss  from  this  contingency  should  not  be  so 
very  great,  because,  before  great  expense  has 
been  incurred  for  machinery  with  all  the  cost 
of  setting  it  in  place,  the  mine  will  have  been 
tested,  the  veins  and  deposits  proved,  and  then 
the  heavier  expenses  of  equipment  are  not  such 
a  risk. 

I  do  not  call  that  mining  enterprise  a  failure 
which  undertakes  to  see  what  there  may  be  in 
a  likely  prospect  and  finds  inadequate  supplies 
of  ore.  If  honestly  put  forward  to  those  who 
may  invest,  and  the  plain  statement  made  that 


34  MINING  INVESTMENTS 

it  is  on  a  prospect  oniy  that  the  hopes  are  based, 
then  if  money  is  properly  applied  the  results 
for  which  it  was  subscribed  have  been  accom- 
plished, and  any  enterprise  which  accomplishes 
that  which  it  has  undertaken  cannot  be  called 
a  failure.  In  opening  up  a  prospect  the  object 
had  in  view  is  to  ascertain  whether  or  not  the 
indications  will  lead  the  operators  to  paying 
ore,  and  money  so  lost  can  be  considered  spent 
in  legitimate  enterprise  and  efforts — and  stocks 
in  exploration  companies  have  great  possibili- 
ties to  win  most  excellent  returns.  A  disaster 
is  different  from  a  failure  in  mining.  A  disaster 
is  loss.  A  failure  in  mining  can  be  considered 
as  such  only  when  ore  has  been  found  and  the 
management  fails  to  obtain  adequate  returns. 
Whatever  may  be  the  miscalculation  if  the 
mine  produces  ore  and  does  not  make  money 
for  its  stockholders  that  mine  is  a  failure. 

The  conditions  which  have  been  noted  are 
those  which  principally  cause  disasters  or  fail- 
ures in  a  mine,  and  people  who  think  of  making 
an  adventure  of  capital  in  a  mining  proposition 
should  study  the  conditions,  and  take  the  risk 
only  after  favorable  indications  have  been 
proven,  or  at  least  strangely  indicated  from  an 
independent  source  of  information. 


IV 

Success  in  Mining 

A  good  old  saying  often  heard  is  "Nothing 
succeeds  like  success;"  a  better  rendering 
would  be,  nothing  succeeds  like  mining.  Not 
anywhere  are  such  profits  made,  nor  in  any 
calling  are  there  such  sudden  tidings  of 
good  fortune.  A  stock  selling  for  a  few  cents 
a  share  develops  an  unexpected  demand,  and 
presently  is  worth  a  large  amount  of  money; 
so  much  that  in  many  instances  a  few  hundred 
dollars  have  returned  abundantly  and  the  for- 
tunate possessor  finds  sufficient  income  to  live 
comfortably  for  a  lifetime.  Such  results  are 
worth  a  risk,  and  so  many  instances  have  been 
known  that  there  is  always  a  chance  that  even 
in  the  most  discredited  stocks  a  strike  may  be 
made  and  great  returns  result.  It  may  be  so 
provided  that  the  mine  is  in  operation,  for  be- 
tween the  stocks  of  dormant  mining  enter- 
prises, and  mines  which  are  in  operation  there 
is  such  a  difference  that  the  same  conditions 
which  would  be  favorable  in  one  would  be  ad- 
verse in  the  other  class,  and,  when  considering 

35 


36  MINING  INVESTMENTS 

success  in  mining,  the  two  classes  of  stocks 
must  be  taken  as  entirely  different.  A  mine  in 
operation  has  always  a  chance  of  an  achieve- 
ment, and  a  great  success.  A  mine  lying  dor- 
mant has  no  chance  at  all,  till  some  arrange- 
ments have  been  made  by  which  the  mine  may 
be  put  in  operation,  then  it  may  attain  a  great 
success,  or  like  any  other  mine  it  may  drag  on 
for  years  and  come  to  nothing  in  the  end. 

Success  in  mining  for  the  stockholder  is  to 
select  and  make  investments  where  profits  are 
obtained,  and  such  results  develop  out  of  care- 
ful mining  practice,  good  management  and 
honesty  in  operating  a  property  of  merit.  In 
making  his  selections  the  investor  is  at  some 
disadvantage,  for  he  must  take  the  statements 
made  by  others,  but  in  forming  an  opinion  one 
should  know  the  elements  and  the  conditions 
which  most  probably  will  lead  on  to  success. 

We  would  all  like  to  invest  a  little  money, 
and  have  it  win  a  competency;  and  it  can  be 
done  in  mining  if  one  understands  the  con- 
ditions of  the  venture,  and  waits  till  the  right 
opportunity  arrives.  This  is  an  important  point 
to  be  considered;  if  one  would  make  a  success 
at  mining,  one  must  wait  till  a  real  opportunity 
arrives.  An  opportunity  does  not  come  with 
such  great  frequency,  and  usually  a  good  min- 
ing proposition  does  not  have  to  seek  very  far 


AND  HOW  TO  JUDGE  THEM  37 

to  obtain  backers,  for  which  reason  those  min- 
ing propositions  seeking  capital  by  much  push- 
ing, advertising  and  inordinate  claims  for 
values  must  be  considered  as  most  doubtful, 
and  safe  to  let  alone.  An  incident  will  illus- 
trate the  fact.  An  advertising  writer  making 
a  specialty  of  mining  literature  said  recently: 
"Well,  for  the  last  eight  years  I  have  been 
writing  up  the  dope  for  mining  propositions 
and  have  seen  sixty  or  more  draw  good  money 
from  investors."  Asked  how  many  of  these 
enterprises  had  been  successful  he  replied  that 
only  one  had  turned  out  well,  another  might 
have  given  good  results  but  the  superintendent 
was  dishonest  to  such  an  extent  that  a  receiver 
was  appointed  and  the  mine  closed  out  to 
others. 

In  sixty  mining  propositions  one  only  was 
successful,  and  how  is  the  investor  to  pick  the 
one  when  all  the  others,  though  great  promises 
are  made,  are  unsuccessful.  Rules  for  judging 
a  mining  proposition  will  be  attempted  in  a 
later  chapter,  the  object  had  in  view  at  present 
is  to  describe  successful  mining  and  the  differ- 
ent stages  of  development  which  lead  up  to 
success. 

It  is  a  favorable  indication  when  the  mine 
seeks  capital  from  general  investors,  that  those 
who  have  the  enterprise  in  charge  are  not  de- 


38  MINING  INVESTMENTS 

pendent  on  the  product  of  the  sale  of  shares 
for  their  own  livings;  and  more  than  this  can 
and  do  risk  some  money  for  their  own  account, 
and  where  such  is  the  case  it  is  a  fair  propo- 
sition to  join  in  with  them.  The  first  step  in 
the  development  of  a  successful  mine  is  that 
people  of  some  responsibility  are  interested  in 
it.  Such  people  usually  proceed  with  caution, 
and  inform  themselves  before  they  take  a  risk. 
A  mining  proposition  brought  to  good  business 
men  has  been  considered,  and  they  are  im- 
pressed by  what  is  said ;  usually  their  next  step 
is  to  send  for  and  obtain  such  local  informa- 
tion touching  on  the  property  as  may  be  avail- 
able; and  these  reports  confirming  what  they 
hear,  the  next  step  is  to  call  a  competent 
geologist,  who  is  asked  to  give  an  opinion  on 
reports  and  samples;  and  he,  thinking  well  of 
what  he  sees,  is  sent  out  to  examine,  and  find- 
ing that  the  ore  deposits  promise  well  advises 
that  the  business  men  take  up  the  proposition. 
Probably  an  agreement  is  now  made  with  those 
who  own  the  property,  the  business  men 
take  up  the  enterprise,  and  their  next  step  is 
to  send  out  a  mining  engineer,  who  passes  on 
the  proposition  in  its  engineering  features,  and 
finding  that  the  mine  admits  of  successful  oper- 
ation makes  his  report  and  recommends  equip- 
ment. Before  this  equipment  is  purchased  ar- 


AND  HOW  TO  JUDGE  THEM  39 

rangements  are  made  to  open  up  the  property, 
and  prove  that  the  ore  is  there  in  quantities, 
which  the  geologist  found  indicated;  and  now 
a  contract  to  a  competent  miner  is  let  out.  The 
business  men  apply  business  methods,  and 
make  contracts  for  their  work,  the  same  as 
would  be  done  in  any  work  of  construction; 
they  do  not  undertake  to  forward  money 
for  day  labor  to  be  performed  in  a  distant  place. 
The  miner  having  the  contract  sets  to  work, 
and  after  a  few  days  begins  to  send  reports 
showing  that  the  mine  is  opening  as  the  geolo- 
gist expected,  and  the  indications  seem  most 
favorable.  But  about  this  time  the  business 
men  find  that  the  money  required  makes  quite 
an  investment  and  they  resolve  to  seek  aid 
from  investors.  A  plain  statement  is  then 
drawn  up,  showing  just  what  the  values  are, 
the  prospects,  the  reports  which  have  been 
made;  not  "dope"  and  flamboyant  literature, 
but  a  plain  concise  statement  of  the  facts  and 
with  it  offering  stock  at  a  fair  valuation.  It  is 
natural  that  an  offering  such  as  this  would  find 
eager  buyers,  and  usually  the  acquaintances, 
associates  and  friends  of  the  practical  business 
men  supply  all  the  money  which  may  be  re- 
quired to  meet  the  payments,  on  the  contract; 
then  when  this  contract  has  been  carried  out, 
and  good  bodies  of  ore  have  been  proven  to 


40  MINING  INVESTMENTS 

exist,  and,  usually  a  mine  examined  and  re- 
ported on  favorably  by  a  competent  geologist 
and  a  competent  mining  engineer  does  turn  out 
well,  and  the  ore  having  been  proved,  the 
next  step  is  to  set  up  the  machinery.  An- 
other statement  is  prepared  showing  the  values 
which  have  been  proven,  and  subscriptions  are 
asked  at  better  prices  for  the  stock,  but  prices 
based  on  actual  values,  and  prety  certainly  the 
offering  is  quickly  taken.  Then  a  competent 
mining  engineer  is  put  in  charge,  other  con- 
tracts are  let,  presently  the  machinery  is 
all  in  place  and  put  in  operation,  and  it  is  but 
natural  that  a  mine  so  managed  will  be  suc- 
cessful and  yield  full  returns  for  many  years. 

Unfortunately,  such  good  management  is 
rare,  and  those  who  know  so  little  about  min- 
ing that  they  proceed  without  any  caution  are 
frequently  in  charge,  and  with  flamboyant 
dopy  literature,  and  glowing  advertisements 
promised  the  immediate  returns  they  so  confi- 
dently expect,  and  glorious  fortune  easily  ob- 
tained. If  only  such  great  promises  could  be 
fulfilled  there  would  be  many  rich;  most  un- 
fortunately, however,  success  but  rarely  follows 
efforts  at  hurried,  little  skilled  and  speculative 
mining. 


The  Relation  of  Mining  Stocks  to  the 
Properties  Back  of  Them 

A  question  which  should  be  among  those 
most  carefully  considered  is,  what  may  be  the 
relation  of  the  stock  offered  to  the  property 
back  of  it.  In  other  words,  what  does  the 
stock  represent?  It  may  be  a  share  in  actual 
ownership,  it  may  be  a  share  in  contingent 
ownership,  it  may  be  a  share  in  prospective 
ownership,  it  may  be  a  share  subject  to  previ- 
ous liens  or  it  may  be  a  share  with  but  limited 
rights.  All  these  different  conditions  affect 
values,  and  one  who  buys  a  mining  stock  surely 
ought  to  know  what  it  is,  and  what  it  really 
represents. 

Whatever  may  be  the  form  of  ownership  the 
question  of  share  divisions  is  very  important. 
It  is  of  small  consequence  what  the  capitaliza- 
tion may  be,  the  important  matter  is  how  many 
shares  are  there?  If  a  mine  were  capitalized 
for  one  million  dollars,  and  there  were  only 
one  share,  that  share  would  be  a  title  to  the 
whole  property,  and  would  be  worth  whatever 

41 


42  MINING  INVESTMENTS 

the  mine,  option  or  contract  might  be  worth. 
If  the  par  value  of  the  shares  were  placed  at 
one  hundred  thousand  dollars  each,  there 
would  be  ten  shares  in  the  million  dollar  capi- 
talization, and  each  share  would  be  worth  one- 
tenth  of  the  value  of  the  whole  property.  If, 
however,  the  shares  were  of  one  dollar  each, 
as  is  usually  the  case  in  mining  corporations, 
there  would  be  one  million  shares  and  the 
value  of  each  share  would  be  one  one-millionth 
of  the  value  of  the  whole  property.  This  fact 
must  be  carefully  held  in  mind  when  one  pro- 
poses to  buy  a  mining  stock.  How  many  shares 
are  there?  What  the  capitalization  may  be  is 
of  not  any  importance.  A  mine  capitalized 
with  only  ten  dollars  and  only  ten  shares  of 
one  dollar  each  is  exactly  the  same  in  ratio  to 
value  as  a  mine  capitalized  for  one  million  dol- 
lars with  ten  shares  of  one  hundred  thousand 
dollars  each.  There  would  be  ten  shares  in 
each  instance,  and  whatever  the  mine  might 
produce  would  be  divided  in  ten  equal  parts, 
and  each  share  would  get  a  tenth.  Similarly 
if  a  mine  were  capitalized  for  one  hundred  mil- 
lion dollars  with  shares  of  one  hundred  dollars 
each,  and  another  mine  were  capitalized  for 
one  million  dollars  with  shares  of  one  dollar 
each,  both  mines  would  have  one  million 
shares,  the  ratios  of  ownership  would  be  the 


AND  HOW  TO  JUDGE  THEM  43 

same  and  each  share  would  be  entitled  to  one 
one-millionth  of  the  product  of  the  property. 
From  this  it  will  be  seen  that  the  par  value  of 
the  shares  is  an  idle  thing  not  to  be  considered. 
The  question  is  how  many  shares  are  there? 
And  it  would  be  better  if  mining  companies 
were  incorporated  with  no  specified  par  value 
and  were  offered  to  investors  as  so  many 
shares.  A  mine  divided  among  a  million 
shares,  a  mine  divided  among  a  hundred  thous- 
and shares,  or  a  mine  divided  among  a  thous- 
and shares.  The  incorporation  laws  of  the 
United  States  require  that  a  par  value  should 
be  specified,  and  under  these  conditions  the 
best  an  investor  can  do  is  to  disregard  the  par 
value  and  inquire  only  as  to  how  valuable  the 
mine  may  be  and  how  many  shares  there  are 
among  which  to  divide  the  products  of  the 
property. 

This  being  in  the  mind  of  an  investor,  and 
having  inquired  as  to  what  the  mine  may  be 
worth  and  how  many  shares  there  may  be;  it 
is  next  in  order  that  inquiries  should  be  made 
as  to  what  the  shares  may  represent.  If  it  is 
actual  ownership  the  conditions  are  the  best, 
and  where  a  mine  is  so  held  it  must  be  shown 
that  the  property  has  been  fully  transferred  to 
the  company,  that  there  are  no  restrictions  in 
the  title  and  that  the  company  is  the  owner, 


44  MINING  INVESTMENTS 

free  and  clear,  an  actual  estate  in  fee.  Unless 
the  mine  is  so  held  the  stocks  are  risky  propo- 
sitions, and  except  the  prospects  are  far  better 
than  the  ordinary,  had  best  be  let  alone. 

Where  a  property  is  held  under  contingent 
ownership,  the  company  will  own  the  property 
in  case  it  complies  with  certain  conditions 
which  it  may  or  may  not  be  able  to  carry  out. 
A  company  incorporated  to  take  a  property 
under  bond  and  lease  is  one  instance.  If  it 
has  the  amount  required  the  company  will  own 
the  property,  and  the  shares  will  represent 
something;  but  if  it  does  not  succeed  in  pay- 
ing the  amount  required,  it  will  forfeit  all  its 
rights  in  the  mine,  and  the  shares  will  repre- 
sent nothing,  and  if  an  investor  thinks  of  buy- 
ing under  such  conditions  he  should  weigh 
well  what  the  chances  are  that  the  company 
can  meet  the  requirements;  for  if  it  does  not 
the  shares  can  never  have  value  of  any  kind  at 
all. 

Many  of  the  rich  mines  in  Spanish  Ameri- 
can countries  are  held  under  concessions,  not 
titles,  and  a  concession  is  nothing  but  a  con- 
tingent interest.  The  company  is  given  the 
property  provided  that  within  a  stated  term  of 
years  it  will  complete  some  work  of  public 
utility,  usually  an  expensive  road  to  be  con- 
structed from  some  part  of  the  country  to  an- 


AND  HOW  TO  JUDGE  THEM  45 

other ;  or  public  buildings  or  other  utilities  may 
be  specified  as  the  work  required,  and  in  every 
case  the  title  is  contingent  on  the  completion 
of  the  work.  Such  properties  are  nothing  but 
contingent  interests,  and  frequently  very 
doubtful  ones  at  that;  for  those  who  grant  the 
concessions  are  shrewd  men,  a  Yankee  isn't  in 
it  with  a  Spanish  American  when  it  comes  to 
arranging  a  contract  in  which  a  sharp  bargain 
is  concealed,  and  usually  those  who  hold  the 
concession  find  that  to  fulfill  the  conditions 
under  which  the  occupancy  of  the  property  has 
been  granted  requires  an  amount  of  money 
much  greater  than  was  expected;  and  if  the 
conditions  are  not  fulfilled,  and  the  public 
works  are  not  delivered  in  the  time  specified, 
then  the  shrewd  Spanish  American  officials 
simply  carry  out  the  terms  of  the  agreement  as 
its  specifications  require,  call  on  the  company 
to  complete  its  bargain;  and  if  it  fails  they 
simply  take  back  the  property  again  with  all 
the  improvements  which  may  have  been  placed 
upon  it,  and  the  shares  of  that  company  then 
represent  nothing,  not  even  dormant  owner- 
ship. 

Thus  many  dangers  are  sure  to  visit  the 
company  holding  property  under  a  contin- 
gency, and  who  buys  shares  in  such  an  enter- 
prise should  have  a  care  and  see  just  what  the 


46  MINING  INVESTMENTS 

chances  are,  and  how  strong  the  company  may 
be  to  give  assurance  that  the  title  will  be  suc- 
cessfully completed. 

Another  form  of  mining  proposition  causing 
frequent  loss  is  one  in  where  the  shares  offered 
represent  prospective  ownership  and  nothing 
more.  Usually  such  shares  are  issued  against  a 
contract  to  acquire  a  property  or  an  agreement 
to  explore  a  property,  and  take  it  over  if  found 
satisfactory.  The  stocks  of  the  exploration 
companies  generally  belong  to  this  class  of  is- 
sue. Where  property  is  offered  with  a  clear 
statement  of  what  the  shares  really  represent 
this  basis  of  organization  is  a  just,  legitimate 
and  often  a  very  profitable  form  of  mining 
speculation.  Frequently  the  true  facts  are  not 
stated  with  clear  precision,  and  the  investor 
subscribing  to  an  exploration  company,  or  to  a 
company  organized  to  test  a  mine,  or  one  in 
which  there  is  simply  a  lease,  is  given  the  im- 
pression that  the  assets  are  in  a  stronger  po- 
sition than  really  is  the  fact.  As  stated,  how- 
ever, this  is  often  a  desirable  form  of  mining 
speculation,  but  the  shares  should  be  either  of 
very  low  price,  or  there  should  be  very  few  of 
them. 

Frequently  an  exploration  company  is  or- 
ganized with  a  very  few  shares.  Perhaps  ten 
men  may  each  put  a  certain  amount  of  money 


AND  HOW  TO  JUDGE  THEM  47 

in  a  pool,  and  send  an  expedition  to  explore  for, 
and  acquire  mines,  and  certainly  the  enterprise 
is  legitimate.  Another  form  of  contingent 
ownership  is  where  indications  of  mineral  have 
been  found,  and  a  company  is  formed  to  search 
the  ground,  and  if  found  promising  to  acquire 
title.  This  too  is  a  legitimate  form  of  oper- 
ation, and  many  successful  ventures  have  been 
made  in  such  enterprises.  Another  form  of 
prospective  ownership  is  the  lease  where  the 
company  owns  nothing  and  can  only  own  such 
ore  as  it  may  be  able  to  take  from  a  property 
in  a  given  time,  less  the  royalties,  or  payments 
which  must  be  made  to  the  owner  of  the  prop- 
erty, so  much  percentage  of  the  value  of  every 
ton  of  ore  the  leaser  may  take  out.  The  own- 
ership in  such  an  organization  is  simply  the 
prospective  ore  the  company  may  succeed  in 
winning  from  the  mine.  Such  enterprises  have 
been  very  profitable,  but  are  not  permanent 
except  when  a  long  lease  has  been  obtained,  in 
which  event  a  longer  life  may  be  expected  for 
the  enterprise;  but  in  any  event  the  capitaliza- 
tion should  be  low,  that  is,  there  should  be 
only  a  few  shares;  or  if  there  are  many  the 
prices  should  be  very  cheap,  and  an  investor 
should  look  to  it  with  great  attention  to  ascer- 
tain that  the  enterprise  is  in  competent  hands. 
Those  companies  which  are  organized  sub- 


48  MINING  INVESTMENTS 

ject  to  mortgages  or  previous  liens  are  rarely 
to  be  well  considered,  and  are  often  very  de- 
ceptive, because  a  better  value  can  be  indicated 
than  the  facts  will  really  warrant,  and  yet  those 
who  put  the  enterprise  forward  may  keep  well 
within  this  law ;  for  what  importance  is  it  that 
a  mortgage,  or  a  lien  for  payments,  should  be 
on  a  mine  such  as  the  property  the  promoters 
are  putting  forward;  a  few  shipments  and  all 
the  mortgages  and  liens  will  be  paid,  at  least 
so  the  promoters  think  and  if  the  investor 
thinks  so  too  he  should  take  a  chance,  but  a 
wise  investor  would  make  pretty  thorough  in- 
vestigation before  placing  his  money  at  such 
a  hazard. 

Companies  issuing  shares  with  limited  rights 
are  not  so  many  in  this  country,  though  pref- 
erence shares  are  not  uncommon,  called  usually 
in  this  market  preferred  shares;  but  in  foreign 
companies  obligations  to  pay  out  of  the  earn- 
ings, large  proportions  to  founders,  discoverers 
and  others  often  burden  a  mine  to  such  an  ex- 
tent that  the  shares  have  very  little  real  value ; 
especially  if  the  preferences  are  in  the  form  of 
obligations  to  be  paid  first  before  the  shares 
have  participation.  These  arrangements  give 
the  shareholders  but  limited  rights  in  earnings, 
and  should  be  carefully  investigated.  Other 
limitations  may  restrict  the  value  of  the  shares, 


AND  HOW  TO  JUDGE  THEM  49 

and  one,  which  is  present  in  almost  every  min- 
ing proposition,  is  the  limited  voting  power 
which  is  granted  to  the  purchased  shares,  the 
shares  which  represent  the  real  money  which 
may  have  been  invested.  According  to  the  law 
each  share  has  equal  voting  power,  but  if  one 
man  holds  the  majority  of  the  shares,  or  if  this 
majority  is  held  by  a  group  of  men  closely  as- 
sociated, they  can  vote  as  they  fancy,  and  do 
just  what  they  please  with  any  property. 
Elections  of  officers  under  such  conditions 
mean  nothing,  the  promoters  appoint  them, 
that  is  all ;  and  where  it  is  found  that  the  shares 
representing  actual  money  invested  are  in  a 
hopeless  minority  the  investor  should  look  well 
to  the  character  of  the  men  with  whom  he  is 
taking  the  risk,  for  if  they  are  not  competent 
in  the  business,  results  are  apt  to  be  very  un- 
favorable, even  though  the  mine  they  have  in 
charge  may  be  most  excellent. 


VI 

Speculative    and   Investment    Value  of 
Mining  Stocks 

The  question  of  what  value  to  place  on  a 
mining  stock  is  one  involving  several  calcula- 
tions. A  mine  is  worth  the  value  of  the  ore 
it  may  contain,  less  the  cost  of  getting  the 
value  out,  and  turning  it  into  money.  If  the 
mine  being  considered  is  a  gold  proposition 
the  question  of  turning  the  product  into  money 
may  be  disregarded  because  the  product  is 
money.  With  all  other  mines  the  question  of 
converting  the  product  into  cash  must  have 
serious  attention. 

A  mine  may  be  compared  to  a  treasure  vault 
in  which  there  is  money,  but  how  much  the 
owners  cannot  surely  tell,  nor  have  the  means 
of  ascertaining  with  great  accuracy,  and  it 
would  be  difficult  for  them  to  say  what  they 
were  worth.  So  with  a  mine,  it  is  a  treasure 
vault  in  which  the  amount  to  be  obtained  is 
hidden,  and  there  is  also  an  added  inconveni- 
ence, that  each  time  the  treasure  vault  is 
opened,  each  time  values  are  extracted  from  it, 
considerable  amounts  of  money  must  be  spent. 
To  such  great  extent  must  money  be  expended 

51 


52  MINING  INVESTMENTS 

that  frequently  it  happens  that  visits  to  the 
treasure  vault  may,  and  frequently  do,  result  in 
expenditures  greater  than  the  worth  of  the 
materials  taken  out.  What  then  is  the  value 
of  an  opportunity  to  take  values  hidden  in  the 
treasure  vaults  of  the  earth?  Value  the  oppor- 
tunity must  have,  else  mining  stocks  could 
not  be  sold,  nor  would  large  amounts  be  ex- 
pended in  making  an  entrance  of  shafts  and 
galleries;  in  seeking  after  these  treasures 
which  are  unseen,  but  which  indications  prom- 
ise, the  influence  is  largely  speculative;  and  as 
the  ground  to  be  opened,  even  in  the  well  es- 
tablished mines,  is  always  an  expectation,  not 
a  known  condition,  the  element  of  speculation 
is  present  always  in  a  mining  enterprise.  Even 
where  no  ores  are  known  certainly  to  be  pres- 
ent yet  where  strong  geological  indications 
make  expectations  reasonable,  there  must  be 
some  value.  It  is  a  chance  to  make  some 
money,  a  chance  difficult  to  reduce  to  any  basis 
of  firm  calculation,  for  if  a  man  felt  sure  and 
considered  it  a  demonstrated  certainty  that  he 
would  make  a  sum  of  money  in  a  given  tran- 
saction, a  gain  of  ten  per  cent,  would  be  suf- 
ficient to  warrant  the  undertaking.  So  in  a 
simple  calculation  we  may  assume  that  a 
chance  to  make  some  money  which  may  be 
considered  secure  is  worth  ninety-one  per  cent. 


AND  HOW  TO  JUDGE  THEM  53 

of  the  amount  involved  as  a  first  investment. 
If  the  risk  increases,  the  amount  of  worth  for 
the  value  of  the  risk  falls  lower,  and  a  man 
who1  would  be  glad  to  put  out  money  on  good 
security  to  gain  ten  per  cent,  would  hesitate  to 
put  out  the  same  money  on  doubtful  security 
even  though  the  gain,  if  made,  would  be  twenty- 
five  per  cent.  Naturally  he  would  ask  for  special 
provisions  if  the  risk  were  taken,  and  if  the 
profits  indicated  were  very  great  he  might  be 
induced  to  take  a  risk  to  a  limited  amount 
of  money ;  and  this  is  the  risk  which  is  taken  in 
the  purchase  of  a  mining  stock.  It  is  worth 
something  and  the  rate  can  to  some  extent  be 
calculated.  If  an  investor  buys  a  stock  on  the 
expectation  that  it  will  return  him  double  the 
money  he  has  risked  it  is  fair  to  consider  that  he 
was  willing  to  put  out  money  on  what  he 
thought  were  good  expectations  that  it  would 
be  doubled,  and  would  make  for  him  one  hun- 
dred per  cent.,  as  it  is  commonly  called ;  that  is 
double  his  money.  If  a  stock  is  bought  at  one- 
fifth  what  the  investor  is  led  to  expect  he  may 
obtain,  then  he  takes  a  risk  to  recover  his 
money  and  four  times  the  amount  as  well,  or 
four  hundred  per  cent,  profit,  as  it  is  somewhat 
erroneously  called,  because  a  per  cent,  is  a 
decimal  of  a  hundred  and  cannot  really  apply 
to  more  than  one  hundred  parts;  but  it  has 


54  MINING  INVESTMENTS 

become  a  common  usage  to  speak  of  gains  be- 
yond one  hundred  per  cent,  and  used  in  this 
sense  one  hundred  per  cent,  has  come  to  mean 
one  fold,  and  five  hundred  per  cent,  return  is 
taken  at  the  meaning  of  five  fold  return,  or 
five  times  the  amount  put  out  obtained  as  a 
profit  more  than  the  original  investment;  and 
as  money  has  come  to  be  expressed  in  dollars 
and  hundredths  of  dollars  or  per  cents.,  the 
usage  is  not  inconvenient  and  as  it  expresses 
clearly  the  meaning  one  would  convey  it  may 
be  considered  a  development,  not  an  error,  in 
a  language. 

Using  per  cent,  in  this  sense  we  may  say  that 
a  stock  selling  at  50%  of  par  is  taken  for  100% 
profit  if  the  purchaser  expects  that  it  will  sell 
at  par.  Similarly  a  stock  bought  at  20%  is 
taken  to  obtain  a  profit  of  four  hundred  per 
cent.  A  stock  bought  at  10%  of  par  is  taken  on 
the  expectation  of  winning  nine  hundred  per 
cent,  and  a  stock  taken  at  one  per  cent,  of  par 
is  purchased  on  the  expectation  of  winning 
ninety-nine  hundred,  almost  ten  thousand  per 
cent  profit.  Such  profits  are  possible  in  min- 
ing, and  we  can  speak  of  the  speculation  value 
as  a  venture  for  a  hundred  per  cent,  winning, 
or  as  a  venture  for  winning  many  thousand  per 
cent.  The  actual  worth  of  such  a  risk,  and 
opportunity  is  of  an  equation  so  variable  and 


AND  HOW  TO  JUDGE  THEM  55 


r 


fluctuating,  that  the  only  calculation  which 
can  be  made  for  the  speculative  value,  is  to 
take  the  actual  value  of  a  mining  stock,  and 
add  to  it  an  allowance  for  the  speculative 
value,  but  this  allowance  will  be  each  man's 
opinion.  The  investment  value  of  a  stock  can 
be  calculated,  and  this  being  known,  what 
would  one  give  in  addition  for  the  stock  be- 
cause of  the  speculative  value,  the  chance  in 
every  mine  that  some  great  body  of  ore  of  high 
worth  may  be  uncovered;  and  the  further 
chance  that  a  paying  mine  may  continue  as  it 
is  for  many  years  and  so  become  a  source  of 
long  continued  profits. 

In  the  course  of  mining  events,  and  all  the 
chances  of  the  hazard  a  mine  must  some  time 
in  its  history  reach  a  point  where  no  more  min- 
eral can  be  had  at  a  profit,  so  the  chance  of  loss 
is  equal,  and  perhaps  more  imminent  than  the 
chances  of  greater  gain. 

In  considering  an  investment  value  of  a 
mining  stock  the  calculations  can  be  based  on 
something  more  tangible  than  the  uncertainties 
of  unknown  values.  Where  good  mining  has 
been  practiced,  the  mine  has  been  opened  up, 
reserves  of  ore  are  established,  geological 
studies  and  surveys  carefully  made,  and  ma- 
chinery constructed  which  the  mine  can  keep 
supplied  for  many  years.  Then  a  calculation 


56  MINING  INVESTMENTS 

based  on  known,  or  at  the  worst,  probable  con- 
ditions, becomes  more  of  a  certainty;  and  the 
geologists  of  a  well  established  company  can 
say  ore  is  in  assured  supply  for  such  and  such 
a  term  of  years,  and  that  the  expectations  of 
increased  values,  and  the  continuation  of  the 
veins  and  deposits  can  be  reasonably  counted 
on  for  such  and  such  a  term  of  years. 

On  this  information  a  value  for  the  shares 
can  be  calculated.  If  the  mine  is  reported  on 
as  good  for  five  years  with  prospects,  that  the 
assured  values  will  continue,  and  further  re- 
serves of  ore  will  be  opened  up,  then  the  mine 
is  on  a  five  year  purchase  basis,  and  if  the 
price  of  the  shares  is  such  that  the  net  divi- 
dends will  be  just  20%,  then  all  the  speculative 
values  are  obtained  for  nothing,  because  at 
20%  the  money  invested  will  be  returned  in 
five  years  and  the  mine  has  five  years  supply 
of  ore  in  sight,  then  all  which  remains  repre- 
senting the  speculative  values  will  be  clear 
profit.  Usually  the  owners  of  such  a  property 
want  something  for  the  speculative  values,  and 
what  is  paid  beyond  the  five  dividends  or  20% 
valuation  may  be  considered  the  price  one  pays 
for  the  speculative  value. 

If  a  mine  is  reported  to  be  good  for  ten 
years  dividends  one  might  consider  buying  it 
on  a  10%  basis,  and  at  that  rate  one's  money 


AND  HOW  TO  JUDGE  THEM  57 

will  be  returned  in  ten  years,  and  whatever  the 
mine  is  worth  at  the  end  of  ten  years  will  be 
the  profit;  but  if  by  chance  there  is  a  mistake 
in  the  estimates  of  the  ore,  and  not  so  much  is 
obtained  as  had  been  expected  then  there  is  a 
loss  on  the  investment ;  on  the  other  hand  bet- 
ter and  more  extensive  ore  deposits  may  be 
encountered ;  though  ten  years  is  a  long  period 
and  the  element  of  chance  cannot  be  eliminated 
but  it  may  be  fortunate,  and  if  the  calculations 
of  ore  in  sight  have  been  made  by  competent 
people  it  should  not  fall  below  the  estimate. 
If  ten  years  supply  is  in  sight  and  one  buys  at 
a  rate  to  pay  less  than  IQ%  then  the  difference 
is  what  is  paid  for  the  speculative  chances. 
Similarly  a  supply  of  ore  to  last  for  20  years 
may  be  reported,  then  if  this  is  proven  one 
could  buy  on  a  5%  basis,  and  in  twenty  years 
all  the  capital  would  have  been  returned  and 
whatever  the  mine  might  be  worth  at  the  end 
of  that  period  would  be  the  profit.  From  these 
estimates  we  may  assume  that  the  speculative 
and  investment  values  of  mining  stocks  go  to- 
gether and  cannot  be  entirely  separated;  con- 
sequently one  who  buys  should  take  both  ele- 
ments into  consideration.  The  proven  values 
should  give  the  money  again  in  a  certain  term 
of  years  which  one  may  calculate  from  the 
dividends  being  paid,  and  the  reserves  of  ore 


58  MINING  INVESTMENTS 

in  sight  as  estimated  by  competent  authority; 
these  are  the  investment  values  and  one  can 
calculate  how  much  they  are  worth,  and  if  one 
pays  more  than  this  one  should  consider  the 
difference  between  the  price  paid  and  the  in- 
vestment or  known  values,  as  the  price  he  pays 
for  a  chance  to  make  some  money  and  thus 
consider  carefully  whether  the  opportunity  and 
expectation  is  of  that  much  value, 


VII 

The  Geology  of  a  Successful  Mine 

In  place  of  this  chapter  a  volume  could  be 
written,  and  then  the  subject  would  not  be 
exhausted.  The  object  of  the  present  work  is 
not  a  scientific  treatise,  or  even  a  guide  for  en- 
gineers. Such  ambitions  are  far  beyond  our 
objects  which  are  simply  to  give  the  facts 
which  will  bear  on  the  advisability  of  accept- 
ing a  mining  proposition,  and  some  little  in- 
formation touching  on  the  relation  of  mining 
to  geology  will  be  desirable.  There  are  many 
forms  of  ore  deposits,  and  of  these  large  de- 
posits moderately  rich  are  more  favorable  than 
small  but  immensely  rich  formations.  An  as- 
say tells  very  little  of  what  may  be  expected 
from  a  mine.  Suppose  a  mine  ran  fifty  thous- 
and dollars  to  the  ton,  as  sometimes  has  been 
found;  it  sounds  attractive,  but  usually  such 
deposits  are  so  very  small  that  they  scarcely 
pay  for  working.  If  this  fifty  thousand  dollar 
ore  were  taken  from  a  seam,  or  pay  streak,  less 
than  an  inch  wide,  the  mine  would  not  amount 
to  much,  because  great  tunnels  or  expensive 
shafts  would  have  to  be  opened  to  get  at  the 
ore;  and  when  one  did  get  at  it  there  would 
59 


60  MINING  INVESTMENTS 

not  be  enough  to  compensate  for  the  expense, 
and  thus  we  can  see  that  the  important  ques- 
tion to  consider  is  not  how  rich  but  how  abund- 
ant an  ore  may  be.  A  mine  having  hundreds  of 
thousands  of  tons  of  ore  easily  worked,  and 
worth  ten  dollars  per  ton  would  be  a  mighty 
fortune,  where  a  mine  containing  but  a  few 
tons  of  fifty  thousand  dollar  ore  might  not  give 
any  returns  beyond  the  expense  of  opening  the 
property,  and,  perhaps,  even  not  so  much  as 
this;  for  the  expense  of  opening  tunnels,  and 
sinking  shafts  might  easily  amount  to  more 
than  the  value  of  the  ore  obtained. 

The  question,  therefore,  in  first  considering 
a  mine  is  not  how  rich  the  ore  may  be  but  how 
much  there  may  be  of  it.  A  big  mine  is  the 
best  though  rarely  yielding  the  richest  ore. 

Of  the  different  forms  of  ore  deposits  we 
have  most  commonly  vein  formations,  and  in 
almost  every  prospectus  the  claim  is  made  that 
the  deposits  occupy  true  fissure  veins,  and 
when  such  claims  are  presented  it  would  be 
just  that  the  prospective  investor  should  ask 
the  promoters  to  prove  it.  Fissure  veins  are 
rare,  and  in  their  largest  meanings  indicate 
fissure  or  cracks  in  the  earth's  crust  caused  by 
some  great  seismic  action,  and  extending  to  the 
depths  of  the  interior  earth  far  beyond  the 
point  to  which  man's  efforts  can  follow  them. 


61 


Cracks  in  the  rocks,  though  they  may  be  ex- 
tensive, are  not  fissures  in  the  earth's  crust, 
and  should  not  be  spoken  of  as  fissure  veins; 
yet  everywhere  we  find  the  claim  made,  true 
fissure  veins,  but  of  these  there  are  few  well 
defined  examples  in  all  the  world;  and  for  a 
long  time  it  was  claimed  that  in  America  true 
fissure  veins  were  not  to  be  found  at  all,  but 
this  is  not  the  fact,  and  several  have  been  re- 
ported on  by  eminent  authorities. 

A  fissure  in  the  earth's  crust,  and  cracks  in 
the  rocks,  these  two  are  commonly  claimed  as 
fissure  veins,  and  is  not  a  crack  a  fissure? 
Certainly  it  is,  yet  a  fissure  vein  is  not  a  crack 
in  the  rocks,  but  a  former  great  opening  in 
the  earth's  crust  which  has  become  filled  up 
with  mineral  bearing  ores.  A  fissure  vein 
must  be  large,  the  sides  or  walls  well  defined, 
it  will  extend  for  some  distance,  and  pass 
through  two  or  more  different  rock  formations, 
but  if  the  ore  deposit  is  found  occupying  a  vein 
in  one  rock  formation  only  it  is  usually  a  crack 
or  local  fissure  in  that  formation.  It  may  be 
large  and  of  importance,  but  it  can  never  be 
so  large  as  a  fissure  in  the  crust  of  the  earth 
passing  through  all  rock  formations  down  to 
unknown  depth  and  should  not  be  called  a  fis- 
sure vein. 

The    formation    of   ore    deposits    such    as 


62  MINING  INVESTMENTS 

are  usually  worked,  may  be  for  ordinary 
usage  divided  into  but  three  classes,  though 
scientifically  many  other  classifications  are 
required  to  accurately  describe  the  different 
forms  of  ore  accumulations.  For  ordinary  in- 
vestigations it  is  sufficient  if  we  consider  the 
three  kinds  of  ore  deposits  as  follows:  Those 
which  have  been  derived  from  mineral  bearing 
solutions,  and  crystallized,  percipitated  or  re- 
placed out  of  the  solution;  next  those  which 
are  simply  accumulations  of  the  ore  by  me- 
chanical means,  and,  finally  those  which  are 
eroded  out  of  the  surrounding  rocks,  and  have 
collected  in  gravel,  or  sand  beds,  called  placer 
deposits.  All  these  forms  present  numerous 
modifications;  the  mines  formed  from  mineral 
bearing  solutions  generally  belong  to  periods 
of  heated  activities  during  which  fissures  were 
developed  in  the  earth's  crust,  and  cracks,  and 
gaping  rents  were  formed  among  the  rocks; 
and  heated  waters,  rising  vapors  and  chemi- 
cal changes  exerted  their  influences  to  form  ore 
deposits.  Subsequently  waters  proceeding  from 
the  depths  of  the  earth  forced  upward,  or  perco- 
lating downward  from  the  surface,  or  following 
drainage  zones  among  the  rocks  dissolved  out 
minerals,  on  their  way  encountered  sulphides, 
and  first  rusting  and  then  dissolving  them  be- 
came acid,  thus  increasing  their  activities  in 


AND  HOW  TO  JUDGE  THEM  63 

dissolving  minerals,  till  they  became  over- 
charged; and  as  a  result  threw  down  some  of 
the  burden  in  cracks,  rents  and  cavities  or  fis- 
sures; continuing  the  action  for  a  long,  long 
period  of  geological  formation;  continually  .de- 
positing a  little  and  a  little,  till  at  last  the  veins 
were  filled,  and  the  mineral  bearing  solutions 
were  forced,  perhaps,  among  all  the  surround- 
ing rocks  forming  outlying  trailers  as  it  were  to 
the  main  deposits.  Sometimes  a  mineral  bear- 
ing acid  solution  will  have  encountered  a  for- 
mation of  alkaline  rocks,  limestone,  etc.,  the 
alkalie  will  be  easier  to  carry  than  the  other 
minerals  so  the  solution  takes  up  or  dissolves 
alkalies  and  deposits  minerals  in  their  places; 
and  similarly  lime  waters  which  are  alkaline, 
and  may  be  mineral  bearing,  will,  on  coming  in 
contact  with  acid  rocks,  take  up  the  acid  ele- 
ment to  neutralize  the  alkalies  and  deposit  min- 
eral in  the  place.  Under  some  one,  or  another 
of  these  forms  the  ore  deposits  found  in  veins, 
seams,  cavities,  cracks,  contacts,  replacements 
or  fissures  will  have  been  formed ;  but  the  only 
questions  which  interest  the  investor  are  how 
big  is  the  deposit  in  which  I  am  asked  to  take 
a  share?  How  rich  is  the  ore?  And  will  the 
mine  continue  production  long  enough  to  re- 
turn a  profit  on  the  money  which  I  may  invest? 
To  answer  these  questions  one  must  be  in- 


64  MINING  INVESTMENTS 

formed  of  all  the  intricate  science  of  economic 
geology,  but  a  few  indications  can  be  given. 

A  mine  found  among  the  rock  formations 
should  occupy  a  well  defined  space,  the  larger 
the  better;  and  the  ore  should  be  fairly  even 
in  appearance,  texture  and  assay  valuation. 

The  ore  should  show  values  in  a  reasonable 
distance  from  the  surface,  two  to  fifty  feet; 
there  have  been  notable  exceptions,  but  as  a 
usual  condition  a  mine  does  not  grow  richer 
at  s  greater  depth.  For  a  time  values  increase, 
then  deeper  still  decrease,  and  when  the  water 
level  has  been  reached  the  permanent  values  are 
developed  and  usually  these  are  not  so  great  by 
far,  and  sometimes  the  mine  becomes  so  lean 
that  further  work  must  be  abandoned  because 
it  will  not  pay. 

Other  forms  of  ore  deposits  are  developed  by 
mechanical  accumulations;  these  are  iron  de- 
posits, coal  beds,  zinc  or  lead  accumulations  as 
residuals  from  rocks  which  have  been  wasted 
away ;  and  less  abundant  chrome  or  manganese 
deposits  residuals  from  rocks  which  have  con- 
tained these  elements.  Here  a  mechanical  ac- 
tion takes  place,  the  material  is  accumulated 
through  the  influence  of  erosion  or  the  decay 
of  rocks ;  or,  in  the  case  of  coal  deposits,  the  ac- 
cumulation of  vegetable  material  with  such 
rapidity  that,  continually  piling  up,  it  is  pro- 


AND  HOW  TO  JUDGE  THEM  65 

tected  from  the  air  and  cannot  oxidize  or  decay, 
and  so  carbonizes  to  form  coal.  The  petroleum 
deposits  are  taken  to  have  originated  from  fats 
of  animals,  and  the  oils  of  plants,  collected 
where  it  would  be  protected  from  the  oxida- 
tion of  the  air,  and  gradually  the  change  has 
taken  place  too  for  petroleum.  Thus  by  me- 
chanical means  we  find  that  many  mineral  de- 
posits have  been  accumulated.  In  some,  both 
mechanical  and  chemical  influences  work  one 
with  the  other,  as  in  the  precipitated  salt  beds, 
gypsum  beds,  iron  ores  of  some  regions  and 
other  minerals;  but  the  mechanical  predomi- 
nates and  in  relation  to  all  these  deposits  the 
questions  which  the  investor  will  ask  are  in 
regard  to  size  and  purity;  for  deposits  of  less 
valuable  ores  and  minerals  must  be  large  and 
very  pure;  and  also  so  situated  that  they  can 
be  transported  at  low  rates,  if  the  proposition 
is  to  yield  a  profit.  If  deposits  of  this  class  are 
found  to  be  large,  to  yield  pure  materials  and 
to  be  so  situated  that  the  product  can  be  car- 
ried to  a  market  at  a  good  profit  it  is  fair  to 
take  a  portion  of  the  proposition,  provided  that 
the  price  is  reasonable. 

Those  ore  deposits  called  placers  in  which 
the  material  sought  is  found  mingled  with 
sand,  gravel  or  other  products  of  erosion  are 
usually  productive  of  the  precious  metals,  gold, 


66  MINING  INVESTMENTS 

platinum,  and  to  its  allied  minerals  and  also 
precious  stones,  and  certain  of  the  rare  ele- 
ments used  in  the  arts.  The  development  of 
such  deposits  is  of  great  interest,  and  usually 
the  various  stages  of  formation  can  be  traced 
in  sequence;  the  washing  down,  and  breaking 
away  of  rocks  among  the  mountains,  and  the 
hills ;  the  grinding,  crushing  and  gradual  wear- 
ing down  of  this  material  in  the  streams  and 
water  courses  and  finally  the  collection  of  the 
precious  metals,  rare  elements,  or  rich  gem 
stones  at  convenient  places.  With  these  for- 
mations the  questions  which  should  be  asked 
by  an  investor  relate  more  particularly  to  the 
facilities  for  working  the  deposit;  for  if  these 
are  good,  a  deposit  which  is  large  though  really 
lean  in  mineralization  may  be  worked  to  very 
great  advantage,  and  substantial  profit.  If  it 
is  big  enough — that  is  the  great  and  all  im- 
portant question  and  should  be  considered 
with  special  care  when  investigating  any  ore 
deposit.  Bigness,  however,  is  but  a  relative  con- 
dition, for  in  a  gold  mine  a  vein  two  feet  wide 
and  well  defined  would,  if  it  carried  good 
values,  be  of  great  importance;  but  as  an  iron 
or  coal  mine  would  probably  be  considered  not 
worth  operating  unless  the  mineral  were  very 
pure,  the  conditions  for  mining  unusually  fa- 
vorable and  a  market  just  at  hand.  Size  is 


AND  HOW  TO  JUDGE  THEM  67 

therefore  relative  and  it  may  be  considered 
favorable  when  it  is  large  for  the  kind  of  min- 
eral which  the  deposit  may  yield. 

Another  condition  of  geological  formation 
which  should  be  considered  in  relation  to  a 
mining  proposition  is  the  structural  formation 
of  the  surrounding  rocks.  If  these  are  very 
hard  the  cost  of  tunneling  and  sinking  shafts 
will  be  great,  perhaps  so  great  that  a  loss  may 
result  where  a  profit  had  been  anticipated.  On 
the  other  hand,  if  the  rocks  or  surrounding 
formations  are  too  soft  the  cost  of  supporting 
the  tunnels,  and  openings,  so  that  they  will 
not  cave  in  may  be  very  great,  and  a  heavy 
charge  on  the  operations;  then,  as  sometimes 
happens,  the  insecure  formations  may  collapse 
causing  loss  and  often  death.  The  proper  con- 
dition is  one  where  the  rocks  are  firm  enough 
to  hold  in  place  with  reasonable  supports,  and 
yet  are  not  so  hard  that  mining  will  be  at- 
tended by  more  than  ordinary  expense. 

Still  another  condition  must  be  considered, 
as  it  may  be  very  adverse  to  profitable  oper- 
ations, and  this  is  faulting.  The  earth's  crust 
is  frequently  in  destructive  movement  and 
sometimes  it  happens  that  a  mineral  deposit 
apparently  good  at  one  place  may  be  found 
shattered  and  destroyed  at  another,  so  that 
profitable  working  is  not  possible.  To  inquire 


68  MINING  INVESTMENTS 

whether  faults  may  be  expected  and  give  an 
intelligent  report  requires  skill  and  long  prac- 
tice, and  even  then  no  one  who  understands 
the  science  of  economic  geology  will  speak 
with  great  assurance.  In  a  general  way  it  may 
be  said  that  if  a  mine  is  located  in  a  country 
where  seismic  activities  have  been  in  evidence, 
and  the  rocks  are  found  broken  and  distorted, 
then  faults  may  be  expected  and  the  investor 
should  proceed  with  caution. 

The  presence  of  water  may  seem  to  some 
scarcely  a  geological  condition  surrounding  a 
mine,  yet  it  is  a  most  important  condition  and 
one  which  must  be  reckoned  with  and  watched. 
The  water  which  accumulates  in  a  mine  must 
be  pumped  out;  pumping  is  expensive  work, 
and  may  eat  continually  at  the  profits  to  such 
an  extent  as  to  sometimes  make  a  mine  un- 
profitable. 

This  chapter  is  but  an  outline,  yet  the  prin- 
cipal conditions  have  been  noted,  and  an  in- 
vestor who  informs  himself  in  regard  to  these 
and  finds  the  conditions  to  be  favorable,  will 
be  justified  in  taking  a  venture  in  the  property 
offered  to  him,  but  if  the  conditions  do  not 
seem  favorable  then  it  would  not  be  well  to 
take  the  venture,  but  look  for  something  in 
which  favoring  geological  surroundings  can  be 
found. 


VIII 

Physical     Conditions     Which     Should 

Surround  a  Successful  Equipment 

for  a  Mine 

A  mine  may  be  equipped  with  the  best  ma- 
chinery and  materials  for  its  operation,  but  this 
is  not  sufficient  to  insure  favorable  results. 
The  equipment  is  necessary,  but  if  the  physical 
surroundings  are  such  that  the  machinery  can- 
not be  operated  to  advantage  the  equipment 
may  be  a  total  loss.  It  seems  strange  that  such 
a  question  should  be  considered,  and  that  those 
who  have  an  enterprise  in  charge  do  not  for- 
see  the  difficulties ;  but  frequently  they  do  not, 
and  one  abundant  cause  contributing  to  lack  of 
foresight,  is  the  hope  which  all  possess,  the 
eager  expectation,  the  belief  that  conditions 
will  turn  out  to  advantage.  These  feelings 
with  statements  from  mining  engineers,  es- 
pecially engineers  who  have  machinery  to  sell, 
that  they  can  design  and  set  up  a  successful 
plant,  lead  on  to  expenditures  which  a  study  of 
the  physical  conditions  would  have  deterred. 

An  incident  in  explanation.  One  of  the  most 
69 


70  MINING  INVESTMENTS 

successful  mining  engineers  and  promoters 
spent  many  thousands  of  dollars,  it  is  stated, 
on  a  mine  where  there  was  an  abundance  of 
good  ore  situated  on  a  certain  coast.  The  ore 
was  to  have  been  shipped  by  steamers,  but 
when  preparations  had  been  made  it  was  found 
that  neither  steamers  or  any  kind  of  vessel 
could  approach  the  coast,  and  that  the  ore 
could  not  be  shipped;  a  detail  of  physical  sur- 
roundings, which,  in  the  eagerness  to  win  the 
great  supplies  of  ore,  had  been  entirely  over- 
looked. To  the  powerful  mining  interest  back- 
ing the  venture  the  loss,  though  considerable 
was  not  disastrous,  and  the  proposition  was 
abandoned.  If  it  had  been  a  mining  company 
raising  money  from  the  sale  of  stock,  another 
would  have  been  added  to  the  long  list  of  min- 
ing ventures  resulting  in  a  total  loss. 

When,  in  the  history  of  a  mine,  the  period 
comes  in  which  machinery  is  to  be  ordered, 
dependence  must  be  placed  on  the  skill  of  min- 
ing engineers ;  and  while  they  may  make  griev- 
ous mistakes  at  times,  usually  the  equipment 
they  recommend  after  due  examination  of  the 
property  will  do  the  work;  but  too  frequently 
incompetent  men  are  employed,  or,  worse  yet, 
a  so-called  practical  miner  is  put  in  charge  and 
then  disaster  will  be  almost  certain. 

The  science  and  practice  of  mining  is  divided 


AND  HOW  TO  JUDGE  THEM  71 

into  three  distinct  branches  in  the  hands  of 
the  geologist,  the  metallurgist  and  the  mining 
engineer.  The  geologist  reports,  or  should  re- 
port, first  giving  a  clear  otatement  of  the 
ore  formations,  the  probable  extent  of  the  ore 
bodies  and  the  physical  conditions  which  sur- 
round the  mine  to  facilitate  or  retard  its  oper- 
ations. The  metallurgist  should  then  study 
and  report  on  the  treatment  which  the  ore  may 
require  in  order  to  extract  the  metals  success- 
fully. The  mining  engineer  should  then  take 
these  reports  and  design  his  machinery  to 
meet  the  conditions  which  may  have  been 
found,  provided,  of  course,  that  physical  con- 
ditions have  not  been  encountered  which  indi- 
cate that  no  profit  can  be  had  in  operating  the 
mine.  The  work  of  the  geologist  and  metallur- 
gist can  be,  and  frequently  are,  undertaken  by 
one  man ;  but  the  preparation  and  designing  of 
machinery  requires  such  a  different  train  of 
thoughts  and  education  that  the  mechanical 
and  scientific  parts  of  mining  do  not  combine 
to  advantage  in  the  hands  of  one  person;  and 
this  is  a  frequent  cause  of  loss  through  errors 
when  geologists  and  metallurgists  attempt  to 
design  machinery,  or  when  engineers  attempt 
to  make  the  geological  reports.  One  not  being 
trained  in  the  specialty  of  the  other  overlooks 
some  details  resulting  often  in  disaster  for  the 


72  MINING  INVESTMENTS 

enterprise.  When  an  investor  is  asked  to  take 
a  venture  in  a  mining  proposition  he  should  in- 
quire whether  the  reports  have  been  made  by 
competent  and  qualified  men,  and  that  an  engi- 
neer has  designed  the  machinery  who  is  not 
only  qualified  and  competent  but  is  also  dis- 
interested, and  is  not  to  profit  by  the  sale  of 
certain  machinery  which  he  may  recommend. 
If  the  question  of  designing  the  machinery  is 
in  competent  hands,  of  an  engineer  who  has  re- 
ceived reports  from  competent  people  so  that 
he  is  well  informed  as  to  the  conditions  with 
which  his  equipment  must  contend,  the  investor 
can  ask  no  more;  and  expectations  for  success 
are  on  a  strong  foundation.  If,  on  the  other 
hand,  the  investor  learns  that  the  different  ex- 
aminations and  surveys  have  not  been  carefully 
made  by  competent  men,  and  that  the  mine  is 
taking  a  long  chance  on  expectations,  then  in- 
quiries should  be  in  order  and  certain  con- 
ditions looked  up  with  care.  Those  conditions 
which  may  prevent  the  successful  consumma- 
tion of  plans  in  mining  ventures  are,  some  of 
them,  as  follows :  Often  a  mine  may  be  abund- 
antly rich  but  inaccessible  to  an  extent  that  the 
cost  of  setting  up  machinery  would  be  so  great 
that  profits  could  not  be  made.  The  recent  de- 
velopments of  mining  interests  in  the  State  of 
Nevada  are  to  some  extent  an  illustration. 


AND  HOW  TO  JUDGE  THEM  73 

Years  ago  these  mines,  which  with  better  trans- 
portations are  now  in  eager  demand,  were 
known  and  some  of  them  even  located,  and  in 
places  attempts  at  working  them  were  made, 
but  almost  all  gave  no  results;  the  costs  were 
everywhere  too  excessive,  and  for  years  Ne- 
vada lay  a  great  abandoned  camp.  Tales  of 
riches  came  from  time  to  time  but  always  little 
heed  was  given,  conditions  for  maintenance 
were  too  unfavorable,  machinery  would  then 
have  been  too  costly  in  such  remote  places; 
and  even  now  mining  must  struggle  with  ad- 
verse conditions  of  transportation  in  Nevada, 
and  some  must  wait  till  better  facilities  can  be 
provided.  In  former  years  I  frequently  had 
offers  from  prospectors  with  requests  that  I 
would  introduce  them  to  men  of  capital  who 
might  be  induced  to  provide  money  for  making 
and  maintaining  mineral  locations  in  Nevada. 
But  in  those  days  mining  propositions  had  but 
little  favor,  and  no  one  cared  to  risk  money 
against  the  then  adverse  conditions  in  the 
deserts  of  that  state.  Probably  this  was  an 
error  of  judgment,  because  to  acquire  a  prom- 
ising mineral  deposit  and  hold  it  till  conditions 
for  its  operations  become  more  favorable  is  al- 
ways good  business,  yet  to  attempt  operations 
on  the  same  mine  while  the  conditions  are  still 
adverse  may  be  the  height  of  folly. 


74  MINING  INVESTMENTS 

This  question  of  accessibility  is  one  of  the 
most  potent  physical  conditions  which  may 
retard  successful  mining,  and  millions  of  dol- 
lars have  been  lost  in  attempting  to  set  up 
machinery  in  distant  places,  usually  because 
the  plans  are  too  ambitious,  and  the  machinery 
too  heavy  for  the  difficulties  which  must  be 
overcome  during  the  transportation.  This, 
however,  is  not  the  only  adverse  physical  con- 
dition. 

Sometimes  machinery  requiring  an  abund- 
ant supply  of  water  is  sent  where  water  is  not 
under  good  control,  or  perhaps  cannot  be  had 
at  all.  Particularly  is  this  true  of  hydraulic 
mining  propositions,  where  a  heavy  head,  or 
fall  of  water  is  required  to  be  conducted 
through  iron  pipes  and  then  directed  with  great 
force  against  the  gravel  beds,  with  which  the 
precious  metals  are  found  mingled ;  and,  wash- 
ing down  the  gravel  cause  it  to  be  carried  by 
the  water  through  long  sluice  ways  where  the 
gravel  is  washed  off,  and  the  gold  dust  being 
of  greater  specific  gravity  settles  down  and 
when  the  water  has  been  turned  aside,  can  be 
collected.  A  very  simple  process  and  if  mis- 
takes have  not  been  made  in  calculating  the 
supply,  the  fall  and  the  means  of  controlling 
the  water,  profits  are  almost  certain  to  be  ob- 
tained. When  such  a  proposition  is  presented, 


AND  HOW  TO  JUDGE  THEM  75 

the  investor  should  make  sure  that  the  sup- 
plies of  water  have  been  surveyed  by  com- 
petent men  and  if  not,  then  special  inquiries 
should  be  made  before  accepting  the  venture. 

Another  physical  condition  working  on  ad- 
verse influence  in  hydraulic  mining  is  that  the 
beds  may  be  so  situated  that  there  is  no  con- 
venient place  to  dispose  of  the  gravel  after  it 
has  been  washed  through  the  sluce  boxes.  It 
is  a  common  practice  to  wash  this  gravel  into 
water  courses,  but  at  some  places  this  is  not 
permitted,  at  others  it  cannot  be  done,  and  the 
gravel  piling  up  may  soon  put  an  end  to  mining 
operations.  In  some  cases  the  gravel  can  be 
elevated  and  carried  off  by  a  heavy  head  of 
water  which  will  rise  to  a  level  higher  than 
that  of  the  gravel  bed;  but  such,  however, 
is  not  always  available  and  an  investor  should 
see  to  it  that  means  and  places  are  at  hand 
where,  in  gravel  mining,  the  accumulations  of 
washed  out  material  can  be  conveniently  dis- 
posed of. 

In  treating  ores  which  must  be  crushed  and 
ground  it  happens  sometimes  that  the  ma- 
chinery is  not  strong  enough  to  reduce  the  ore 
to  a  sufficiently  fine  powder  in  order  to  extract 
the  minerals,  a  matter  which  should  never  be 
an  impediment,  but  which  frequently  works 
great  disadvantage  in  a  mining  proposition; 


76  MINING  INVESTMENTS 

and  even  well  known  mining  engineers  have 
been  at  fault  by  not  providing  machinery  of 
strength  sufficient  to  withstand  the  strain. 

Where  ores  are  to  be  smelted  it  often  hap- 
pens that  fluxes,  that  is,  material  which  will 
help  melt  the  ore,  are  not  at  hand,  or  being  at 
hand  the  cost  and  difficulties  attending  their 
delivery  at  the  works  are  such  that  operations 
show  a  loss.  A  simple  matter  such  as  this  has 
many  times  caused  ruin  in  an  enterprise  where 
more  careful  investigations  would  have  saved 
the  loss  of  time  and  money. 

Always  in  every  mining  proposition  there 
are  difficulties  which  must  be  overcome  before 
the  machinery  can  be  operated  with  success, 
and  often  physical  conditions  which  are  of 
themselves  but  simple  matters  have  been  over- 
looked. Those  which  principally  work  to  im- 
pede the  successful  development  of  a  mining 
proposition  have  been  noted,  and  an  investor 
of  discernment  can  by  making  inquiries  ascer- 
tain whether  the  physical  surroundings  are 
favorable  or  are  adverse,  and  whether  all  have 
been  studied  and  reported  on  by  competent 
men  of  good  reputation.  To  pass  on  the 
physical  surroundings  of  a  mine  does  not  re- 
quire great  skill,  the  questions  are  largely  prac- 
tical, relating  to  means  of  transportation,  easy 
access  for  shipment,  facilities  for  maintenance, 


AND  HOW  TO  JUDGE  THEM  77 

supplies  of  water,  abundance  of  timber,  sup- 
plies of  materials  for  smelting,  the  relative  po- 
sition of  the  ore  bodies  to  the  fall  of  water, 
where  such  is  required,  and  the  strength  of  ma- 
chinery which  may  be  required  in  treating  the 
ore ;  and  where  a  competent  man  has  passed  on 
these  an  investor  may  be  warranted  in  placing 
some  money  in  the  venture,  provided  other 
conditions,  the  supply  of  satisfactory  ore  and 
the  general  prospects  promise  well. 


IX 

Personnel    and     Business    Organization 

Required  to  Attain  Success  in 

Mining 

Probably  the  claim  that  mining  is  a  difficult 
business  will  not  be  disputed.  The  technicali- 
ties where  trained  skill  is  required  are  many, 
yet  though  the  fact  is  well-known,  men  who 
have  no  adequate  information  in  regard  to  the 
science  and  profession  of  mining  engineering, 
are  so  frequently  in  charge  of  mining  enter- 
prises that  it  is  well  said  that  any  one  thinks 
he  can  run  a  mine  successfully;  a  mistake  at- 
tested by  the  numerous  disasters  which  fol- 
lowing mining  ventures. 

I  have  been  called  on  to  examine  many  un- 
successful mining  enterprises  where  I  have 
found  doctors  of  medicine,  doctors  of  di- 
vinity, lawyers,  journalists,  brokers,  farmers, 
army  officers,  sea  captains,  in  fact  men  of  al- 
most every  calling  in  charge  of  the  enterprises, 
and  it  is  scarcely  worth  while  to  add  that  the 
mines  were  unsuccessful. 

One  would  think  that  a  doctor  of  medicine 

79 


80  MINING  INVESTMENTS 

would  hardly  be  calculated  to  make  a  success 
of  mining,  yet  there  are  many  who  make  the 
attempt,  and  I  cannot  recall  one  who  has  been 
successful.  Of  the  doctors  of  divinity  and 
plain  ordinary  ministers  there  are  some,  but 
the  "golden  rule"  does  not  seem  to  fit  well; 
perhaps  the  ministers  are  too  confiding,  at  any 
rate  they  are  usually  most  woefully  "stuck," 
and  come  out  of  it  with  anything  but  credit. 
When  lawyers  leave  the  work  of  corporate 
organization,  and  financing  the  enterprise,  to 
take  up  the  physical  management  of  a  mining 
property  they  are  about  the  easiest  proposition 
a  designing  operator  or  mining  engineer  with 
machinery  to  sell  can  encounter,  and  the  list 
of  failures  in  mining  enterprises  managed  by 
lawyers  is  very  long  and  painful. 

A  young  lawyer  was  sent  to  Alaska  during 
the  former  days  of  excitement  and  speculation. 
He  had  a  good  trip,  superintended  the  invest- 
ment of  a  million  or  so  of  dollars  on  behalf  of 
a  company  of  such  prominence  that  its  name 
was  known  throughout  the  country.  The 
whole  scheme  was  unfortunate,  results  were 
not  adequate;  the  man  was  honest,  brilliant, 
trained  in  legal  technicalities,  a  splendid  lawyer, 
but  the  relationship  between  the  expenditures 
and  the  compensating  results  which  must  be 
looked  for  he  did  not  understand.  Why  should 


AND  HOW  TO  JUDGE  THEM  81 

any  one  expect  that  he  would  obtain  results? 
And  as  was  natural,  the  enterprise  was  a  fail- 
ure absolute  in  total,  and  the  stock  is  worth 
not  one  cent  a  share  today.  To  multiply  illus- 
trations would  serve  little  purpose;  one  more, 
however,  will  be  instructive.  A  young  lawyer 
was  sent  west  during  the  rougher  days  of  de- 
velopment in  that  section  of  the  country.  He 
undertook  to  manage  a  mine  where  a  tunnel 
was  to  open  up  a  large  ore  deposit.  Work  was 
ordered,  the  young  man  was  made  much  of, 
progress  was  rapid  and  reports  satisfactory. 
A  long  tunnel  was  in  construction,  nicely  but 
not  heavily  timbered,  paid  for  at  contract 
prices ;  and  the  snow  deep  on  the  mountain  did 
not  impede  the  work.  But  when  the  spring- 
time came  melting  snows  revealed  a  lot  of  col- 
lapsing timbers  on  the  mountainside;  the 
miners  had  simply  tunnelled  through  the 
snow.  Dishonest?  Of  course  it  was,  but  the 
young  lawyer  had  been  stuck,  and  the  money 
was  lost  just  the  same.  Dishonesty  is  so  com- 
mon in  mining  that  only  those  who  have  been 
trained  to  know  when  work  is  proceeding 
properly  can  expect  to  contend  successfully 
against  it. 

Of  all  the  people  who  without  the  necessary 
training  attempt  to  manage  mining  enterprises 
lawyers  make  the  most  failures,  though  some 


82  MINING  INVESTMENTS 

lawyers  do  make  great  successes;  but  usually 
they  have  surrounded  themselves  with  com- 
petent, trustworthy  engineers,  geologists  and 
mine  operators. 

To  enumerate  instances  would  be  of  little 
value.  The  history  of  enterprises  managed  by 
people  who  do  not  understand  the  require- 
ments of  the  work  they  have  undertaken ;  who 
do  not  know  good  work,  and  cannot  distin- 
guish it  from  bad,  have  but  one  ending — fail- 
ure, and  so  probably  it  will  always  be. 

Of  more  use  and  interest  is  it  to  inquire  of 
the  successes  in  mining  operation,  in  order  that 
an  investor  may  seek  for  similar  organizations. 
One  would  not  care  to  invest  in  a  bake  shop 
which  a  shoemaker  proposed  to  set  up,  and 
operate;  nor  in  any  business  which  a  man 
without  the  necessary  training  was  proposing 
to  establish;  a  carpenter  could  not  operate  a 
tailoring  shop,  nor  could  a  cook  be  expected  to 
make  successful  work  of  house  painting;  yet 
not  more  out  of  place  than  these  are  some  who 
undertake  to  manage  mining  operations. 

Surely  it  is  a  simple  matter  of  inquiry  to  as- 
certain whether  those  who  ask  for  money  with 
which  to  operate  a  mine  understand  the  work 
which  they  propose,  and  common  sense  should 
prompt  one  to  seek  participation  in  mining 
operations  with  mining  men;  competent  men 


AND  HOW  TO  JUDGE  THEM  83 

trained  to  the  work,  and  better  yet,  with  those 
who  have  made  records  for  success.  There 
are  mining  engineers  who,  in  a  few  hours,  can 
obtain  almost  any  sum  of  money  for  mining 
operations,  because  many  people  know  that 
they  have  been  successful,  and  are  eager  to 
participate  in  enterprises  which  they  recom- 
mend. This  is  good  practice,  and  right  pro- 
cedure on  the  part  of  an  investor;  not  only  to 
seek  investments  with  those  who  understand 
what  they  are  undertaking,  but  to  seek  also 
practical  mine  operators,  for  there  are  many 
who  understand  the  business,  and  have  fol- 
lowed it  as  a  business,  not  a  technical  pro- 
fession. I  refer  to  people  who  actually  oper- 
ate mines,  not  brokers  in  mining  shares,  for 
they  rarely  know  much  of  actual  mining  and 
where  they  attempt  to  manage  operations  in 
place  of  speculations,  usually  make  disastrous 
failures.  One  can  buy  stocks  through  brokers 
and  one  should  look  to  his  broker  for  accurate 
information  in  regard  to  the  properties  whose 
stocks  they  handle.  Where  a  broker  is  a  care- 
ful student  of  values,  and  conditions,  his 
guidance  is  most  valuable,  and  through  deal- 
ing with  competent,  trustworthy  brokers  many 
investors  have  made  comfortable  fortunes 
through  investments  in  mining  shares.  There 
are,  unfortunately,  many  brokers  and  agents 


84  MINING  INVESTMENTS 

handling  mining  stocks  who  are  not  worthy  of 
confidence;  so  many  such,  in  fact,  that  mining 
stocks  have  become  discredited  to  an  ex- 
tent that  they  are  frequently  spoken  of  as  a 
reproach,  when  in  reality  they  are  the  most 
profitable  ventures  which  one  can  undertake; 
the  only  investments  where  a  small  amount  of 
money  can  make  profits  which  are  sometimes 
a  competency  for  the  fortunate  possessors.  To 
be  successful  requires  many  precautions,  not 
the  least  of  which  is  to  know  the  people,  the 
reliability  of  the  man  who  recommends,  the 
capability  of  the  men  who  propose  to  operate 
and  something  of  the  business  organization. 

In  all  walks  of  life  there  are  dishonest  men, 
hosts  of  men  are  incompetent,  the  vast  ma- 
jority of  all  men  are  failures ;  why  then  should 
mining  come  in  for  such  severe  treatment  of 
public  criticism,  when  there  are,  perhaps,  more 
successes  and  greater  returns  in  legitimate 
mining  than  in  any  other  enterprise? 

Plain  business  methods  should  apply,  and 
this  introduces  the  subject  of  the  business  or- 
ganization. It  may  consist  of  a  well  fur- 
nished office,  a  big  safe,  a  stock  book  and  a 
talkative  promoter.  Probably  there  will  be 
prospectuses,  maps  and  numerous  samples. 
An  outfit  such  as  this  should  make  one 
cautious1  iand  whenever  the  flag  is  put  out, 


AND  HOW  TO  JUDGE  THEM  85 

as  it  were,  to  catch  the  eye,  the  investor  should 
beware.  What  he  should  look  for  is  an  organi- 
zation which  will  be  useful  to  the  work  pro- 
posed, not  attractive  furnishing  to  catch  the 
eye;  and  not  to  place  too  much  reliance  on 
specimens  shown  by  people  on  whose  state- 
ments one  cannot  thoroughly  rely.  A  story  is 
told  of  how  it  happened  once  in  London  that  a 
broker  in  mines  had  sold  a  property,  and 
among  the  samples  he  had  shown  was  one  of 
great  beauty,  white  quartz  studded  with  gold, 
a  specimen  to  be  desired.  The  mine  had  been 
disposed  of,  and  a  friend  who  had  helped  in  the 
transaction  said  to  the  broker :  "Now  the  mine 
is  sold  you  do  not  need  the  specimen,  let  me 
have  it  for  my  collection."  The  broker  hesi- 
tated, took  up  the  pretty  piece  of  ore,  stroked 
it  and  then  said :  "No,  you  can't  have  it ;  this  is 
the  third  mine  I  have  sold  with  that  sample 
and  I  think  I  need  it  in  my  business." 

Here  is  a  criterion  on  business  organization: 
bright  specimens  and  show;  if  it  is  to  sell  the 
stock  it  will  be  in  this  form ;  if  it  is  to  work  the 
mine  it  will  be  in  another  form;  one  will  be 
arranged  to  attract  the  eye,  the  other  to  facili- 
tate work  for  the  mines.  Where  the  object 
in  view  is  simply  to  sell  the  stock,  the  attract- 
ive will  predominate;  where  facilities  to  work 
for  the  mining  operations  are  considered,  prac- 


86  MINING  INVESTMENTS 

tical  and  often  inexpensive  equipment  will  be 
found.  The  atmosphere  of  a  place  to  catch 
the  fancy  is  so  different  from  that  of  a  place 
organized  to  accomplish  some  practical  work 
that  one  should  not  be  deceived.  If  doubt 
is  caused  by  the  surroundings  one  should  in- 
quire what  the  plans  might  be  for  business 
organization,  and  should  be  shown  plans  such 
as  practical  business  men  would  approve. 
The  office,  at  the  financial  center,  where  the 
mine  is  being  offered,  should  be  good  enough 
to  enable  those  who  have  the  work  in  charge 
to  exhibit  successfully  the  maps,  reports  and 
specimens,  and  to  show  the  special  advantages 
of  the  property  seeking  capital  for  its  oper- 
ation. They  should  show  what  it  is  costing 
to  raise  the  money  through  sale  of  shares ;  they 
should  show  what  work  is  being  done  on  the 
property  they  represent,  or  what  money  is  be- 
ing accumulated  to  provide  for  work;  they 
should  show  the  names  of  men  on  the  board  of 
directors  who  are  competent  to  pass  on  propo- 
sitions relating  to  the  practical  operation  of  a 
mine ;  they  should  show  suitable  arrangements 
for  obtaining  their  machinery,  and  competent 
reports  of  the  requirements  which  it  must  fill 
in  order  to  win  money  from  the  ore;  they 
should  show  their  system  of  accounts,  and 
how  they  propose  to  check  up  the  expenditures 


AND  HOW  TO  JUDGE  THEM  87 

with  the  results  obtained;  they  should  show 
what  arrangements  are  in  progress  for  the 
organization  of  the  working  force  at  the  mines, 
and  the  system  proposed  for  checking  up  the 
daily  expenditures,  and  accounts;  they  should 
show  what  systems  they  propose,  or  have  es- 
tablished, for  taking  care  of  the  mineral  which 
may  be  obtained;  if  the  proposition  is  one 
handling  products  which  must  be  marketed 
they  should  show  what  arrangements  are  being 
made  for  handling  the  sales  department  and 
finally  they  should  show  that  they  have  the 
services  of  a  competent  mining  man,  or  better 
yet,  mining  engineer  to  have  charge  of  the 
operations  at  the  mine.  If  on  investigation  it 
is  found  that  these  particulars  of  organization 
are  not  receiving  much  attention,  then  it  is 
pretty  evident  that  they  are  not  thinking  of 
mining,  but  only  of  selling  stock;  and  on  gen- 
eral principles  their  proposition  is  safe  to  let 
alone. 


Inquiries  Which  Should  be  Made  Before 

Accepting  a  Mining  Venture; 

How  to  Make  Them 

There  is  scarcely  a  limit  to  the  inquiries 
which  one  could  make  in  regard  to  a  mining 
proposition;  a  few,  however,  are  essential,  and 
from  these  one  can  form  a  clear  idea  of  what 
the  opportunities  may  be.  Of  one  thing  a  per- 
son may  be  absolutely  sure,  no  mining  propo- 
sition can  be  offered  which  is  not  worth  in- 
vestigating; and  if  one  but  investigates  wisely, 
and  selects  desirable  propositions  one  will  be- 
come rich  through  successful  mining  invest- 
ments. Many  a  proposition  will  be  found  lack- 
ing in  merit  and  not  worthy  of  an  investment, 
but  all  are  worth  investigating,  because  only  by 
investigation  can  one  find  the  desirable  propo- 
sitions. 

In  making  the  inquiries  one  should  first 
ascertain  what  the  proposition  really  is  in 
regard  to  its  present  status,  that  is,  at  the  time 
when  one  is  asked  to  embark  on  the  venture. 
The  prospectus  will  tell  of  shafts  and  gal- 

89 


90  MINING  INVESTMENTS 

leries  to  be  opened,  mills  which  are  to  be 
erected,  estimates  of  earnings  will  be  quoted, 
and  dividends  to  be  paid  will  be  mentioned. 
As  a  matter  of  fact  the  mine  may  have  none  of 
these  things,  and  whether  it  gets  them  or  not 
will  depend  on  whether  the  promoters  suc- 
ceed in  selling  the  shares  to  provide  money  to 
pay  for  the  proposed  improvements;  and  hav- 
ing secured  the  money  there  is  still  a  question 
as  to  whether  the  results  cited  in  the  pros- 
pectus will  be  attained  even  after  the  money 
has  been  raised,  for  all  managements  are  not 
successful.  The  first  inquiries  therefore  should 
relate  to  what  the  mine  really  is  at  the  time  of 
investment.  Let  the  prospective  investor  make 
the  following  inquiries:  He  should  ask  to  see 
the  original  reports  which  the  engineers  or 
geologists  have  made.  In  these  reports  he 
should  find  an  accurate  description  of  the 
property,  as  the  geologist  found  it.  If  such 
description  is  not  in  the  report,  then  the  in- 
vestor may  well  decide  that  the  promoters  are 
proceeding  without  definite  information,  and 
are  therefore  showing  indications  either  of  in- 
capability or  dishonesty,  and  the  investor  can 
let  the  proposition  alone. 

He  should  next  inquire  what  actual  money 
has  been  expended,  first  in  the  acquisition  of 
the  property,  and  after  that  in  the  improve- 


AND  HOW  TO  JUDGE  THEM  91 

ments  which  have  been  made.  His  next  step 
should  be  to  compare  the  reported  cost  of,  and 
the  improvements  on  the  property  under  his 
consideration  with  the  cost  of  similar  proper- 
ties and  improvements  which  have  been  made 
on  successful  mines.  Usually  the  figures  can 
be  had  by  getting  the  annual  reports  from 
several  different  mining  companies  which  are 
successful,  and  comparing  the  costs  and  re- 
sults at  these  properties  with  the  costs  and  re- 
sults at  the  mine  in  which  he  is  asked  to  in- 
vest. If  it  is  seen  that  the  proposition  he  is 
considering  is  being  operated  at  a  much 
greater  cost  than  were  the  successful  mines, 
then  it  is  evident  that  mismanagement  is  in- 
dicated, and  he  should  not  invest,  because  no 
matter  how  good  a  mine  may  be,  if  it  is  mis- 
managed it  will  not  be  profitable  for  the  stock- 
holders. In  making  investigation  for  efficiency 
the  investigator  must  remember  that  a  new 
proposition  can  never  be  on  as  good  a  work- 
ing basis  as  a  well  organized  and  established 
property,  but  if  there  is  a  very  great  discrep- 
ancy then  the  new  proposition  is  not  being 
operated  to  reasonable  efficiency  and  should 
be  let  alone. 

Having  found  what  the  actual  state  of  the 
property  is,  the  next  inquiry  should  be  what  is 
the  property  actually  worth  in  money,  not 


92  MINING  INVESTMENTS 

prospects.  This  actual  worth  is  often  difficult 
to  ascertain,  but  in  every  mining  country  there 
are  bankers,  brokers  and  dealers  in  mining 
property;  and  one  can  write  to  some  person 
situated  near  the  mine  in  question  to  ascertain 
at  what  rates  mining  property  can  be  pur- 
chased. If  one  is  considering  a  mining  invest- 
ment, it  is  worth  while  to  write  such  letters, 
because  by  this  means  one  may  very  often  hear 
of  really  desirable  propositions  to  be  had  at 
low  rates,  or  rather,  at  fair  rates ;  because  min- 
ing property  if  it  is  good  for  anything  is  cost- 
ly. Having  ascertained  approximately  what 
the  worth  of  similar  property  may  be,  one  can 
make  an  estimate  of  the  actual  worth  of  the 
proposition  in  which  he  is  asked  to  invest. 
This  actual  worth  divided  by  the  number  of 
shares  in  the  proposition  gives  the  actual  worth 
per  share.  This  represents  the  actual  present 
worth,  but  the  shares  must  be  of  greater  value, 
the  prospect  must  be  good  and  worth  some- 
thing, else  the  shares  would  not  be  worth  buy- 
ing. To  calculate  what  is  being  paid  for  the 
prospect,  the  chance  of  making  a  big  profit, 
take  the  actual  worth  of  a  share  and  subtract 
it  from  the  price  at  which  they  are  offered. 
Now  we  have  the  question — is  the  prospect 
worth  the  amount  represented  by  the  differ- 
ence— the  most  difficult  question  in  mining, 


AND  HOW  TO  JUDGE  THEM  93 

for  it  deals  with  speculative  quantities,  and 
conditions  which  can  be  estimated  but  not 
surely  known.  To  proceed  in  estimating  what 
the  chances  are  one  must  compare  the  propo- 
sition offered  with  the  early  conditions  which 
were  found  in  successful  mines  and  properties 
which  have  turned  out  winners  to  the  great 
profit  of  their  owners.  To  obtain  this  infor- 
mation one  can  visit  the  public  libraries,  and 
look  back  among  the  old  files  of  the  mining 
journals  of  the  dates  corresponding  to  the 
period  of  the  first  history  of  any  great  mine; 
and  there  pretty  certainly  will  be  found  accu- 
rate descriptions  and  published  reports,  or,  if 
these  are  inaccessible,  one  can  send  a  subscrip- 
tion to  one  of  the  better  class  mining  papers, 
and  ask  for  information  as  to  the  early  history 
of  some  two  or  three  mines  which  he  would 
like  to  compare  in  their  earlier  or  prospective 
stages  with  the  property  in  which  he  is  asked 
to  invest.  He  should  seek  the  technical  mining 
papers  for  his  information;  the  mining  press 
which  deals  with  questions  of  investment 
values  has,  up  to  the  present  time,  been  of  but 
little  service.  The  technical  papers  are  man- 
aged by  men  skilled  in  the  technicalities  of 
mining,  and  will  have  the  best  authorities  on 
mining  among  their  contributors;  and  any  in- 
formation which  may  be  had  from  them  will 


94  MINING  INVESTMENTS 

be  worthy  of  careful  thought  and  consider- 
ation. They  will  treat,  however,  only  of  tech- 
nical subjects  in  their  relations  to  mining;  in 
regard  to  investment  or  speculative  values 
they  will  have  very  little  information.  Such 
points  the  investor  must  decide  for  himself.  If 
he  has  good  judgment  ,in  selecting  mining  in- 
vestments he  can  make  a  fortune,  but  if  after 
four  or  five  trials  he  finds  that  his  judgment 
has  not  been  good  then  he  had  better  seek 
some  other  field  of  industry  for  his  ventures. 
When  one  has  received  the  information  in  re- 
gard to  the  early  history  of  great  mines  it  will 
be  found,  in  the  majority  of  cases,  that  the 
properties  have  been  great  from  the  start,  that 
the  exposures  of  ore  have  been  large  and  have 
attracted  wide  attention.  One  will  find,  on  the 
other  hand,  that  in  only  a  few  instances  have 
inferior  showings  of  mineral  led  to  great  mines, 
though  there  are  some  notable  exceptions. 
One  may  judge  and  be  warranted  in  the  opin- 
ion that  where  there  are  great  ore  exposures 
the  prospective  value  is  worth  a  considerable 
amount  of  money,  and  in  some  instances  may 
warrant  a  very  high  price  for  the  shares,  much 
more  than  the  total  of  actual  values  existing 
before  development.  If  it  is  a  medium  ex- 
posure of  ore,  and  expectations  are  entertained 
that  on  opening  the  property  greater  values 


AND  HOW  TO  JUDGE  THEM  95 

would  develop,  the  prospective  value  is  worth 
something  more  than  the  actual  selling  values 
at  the  time  this  stock  is  offered.  Especially  is 
this  true  if  the  ore  exposures  are  of  a  quality 
which  will  pay  for  mining,  and  treatment  to 
extract  the  metals ;  but  if  the  ore  exposures  are 
of  poor  quality,  not  sufficiently  valuable  to  pay 
for  the  working  and  milling;  or  if  there  are 
only  inferior  amounts  exposed  though  the 
quality  may  be  good,  and  the  mine  to  pay  must 
find  larger  ore  deposits,  the  stock  is  worth 
very  little  more  than  the  actual  selling  value 
for  the  property,  and  if  there  is  no  selling  or 
actual  value  then  the  stock  may  be  considered 
worthless,  though  one  might  give  a  few  cents 
a  share  for  the  chance  that  something  valuable 
might  be  found,  especially  if  the  speculation  is 
in  the  hands  of  capable  people. 

In  making  these  investigations  one  must 
trust  very  much  to  others.  Investing  money 
is  intrusting  it  to  others  who  will  use  it  and 
pay  for  the  privilege;  and  as  some  can  be 
trusted,  and  some  cannot,  and  as  some  are  suc- 
cessful and  some  are  not,  an  investor  who 
would  make  money  on  his  investments  must 
find  men  who  combine  the  two  qualities ;  they 
must  be  trustworthy  and  they  must  be  suc- 
cessful in  the  line  of  enterprise  for  which  they 
solicit  the  co-operation  of  capital.  In  mining 


96  MINING  INVESTMENTS 

one  will  secure  better  returns  with  the  right 
kind  of  people  than  in  any  other  line  of  busi- 
ness; however,  doctors  of  medicine  who  have 
not  secured  a  practice,  lawyers  without  briefs, 
ministers  without  charges  and  business  men 
who  have  been  unsuccessful  in  other  oper- 
ations are  not  more  apt  to  be  successful  at 
mining  than  they  have  been  in  their  previous 
callings ;  and  however  honest  they  may  be  it  is 
not  honesty  alone,  but  profits  for  the  use  of 
money  which  the  investor  wants.  The  most 
important  part  of  the  investigation  to  an  in- 
vestor is  the  investigation  of  the  people  to 
whom  his  money  is  to  be  intrusted,  because  if 
the  people  are  reliable  and  successful  one  can 
be  pretty  safe  in  taking  a  chance  with  them; 
and  if  they  are  of  doubtful  record  or  if  they 
have  not  been  successful  one  had  best  let  the 
proposition  go  and  look  for  something  better. 

In  making  the  investigation  of  people  one 
can  proceed  with  some  assurance  that  the  in- 
formation can  be  promptly  and  accurately  ob- 
tained. 

If  a  person  has  money  to  invest  it  is 
natural  that  he  should  have  a  bank  account, 
and  his  first  step  in  making  an  investigation 
should  be  a  request  to  his  bank  to  write  the 
bank  nearest  the  place  where  the  mine  is  situ- 
ated and  ascertain  what  the  local  credit  and 


AND  HOW  TO  JUDGE  THEM  97 

standing  may  be  for  the  enterprise  under  con- 
sideration. This  will  give  him  an  idea  of  the 
credit  of  the  parties,  and  the  property.  The 
opinions  which  may  be  given  by  the  bank  offi- 
cers as  to  the  advisability  of  investing  in  the 
mine  are  of  little  value,  for  bank  officers  know 
nothing  of  mining,  and  have  persuaded  many 
people  to  turn  away  from  mining  propositions, 
which  have  made  fortunes  for  others  who  had 
assumed  the  risk.  Mining  is  a  risk  and  a 
speculation,  and  as  such  has  no  part  in  bank- 
ing ;  the  bank  officers  deal  in  loans,  and  credits, 
and  are  supposed  to  know  the  standing  of 
people  and  enterprises  in  the  communities 
about  them ;  a  letter  from  one  bank  to  another 
making  inquiries  is  pretty  sure  to  be  promptly 
and  accurately  answered,  and  the  investor  will 
learn  that  the  proposition  he  is  considering  is 
of  good,  fair,  indifferent  or  questionable  local 
reputation;  and  can  to  that  extent  ascertain 
whether  the  managers  are  to  be  trusted  with 
his  money. 

Let  him  next  take  the  names  of  all  the  offi- 
cers, including  the  directors  of  the  enterprise, 
and  in  the  same  way  have  his  bank  write  local 
banks  where  these  people  may  reside,  and  find 
out  what  their  local  reputation  may  be  worth. 

Next  he  should  ascertain  which  one,  or  more, 
among  the  officers  represent  the  active  pro- 


98  MINING  INVESTMENTS 

moting  interest  in  the  enterprise.  Let  him 
then  take  these  names  and  the  name  of  the 
company,  and  get  a  commercial  credit  report 
on  them  from  some  one  of  the  great  rating 
agencies,  asking  for  information  in  regard  to 
both  the  people  and  the  enterprise;  this  will 
give  their  general  credit  and  reputation;  but 
the  mercantile  rating  agencies  are  often  mis- 
taken, most  grievously  mistaken,  and  many 
worthy  people  suffer  because  of  statements 
which  they  make.  Two  instances  will  illus- 
trate. I  have  certain  knowledge  of  an  inquiry 
which  was  made  of  a  very  prominent  mer- 
cantile rating  agency.  The  report  stated  that 
the  parties  were  unknown,  had  no  credit  and 
no  commercial  standing.  The  people  were  not 
rich  but  they  were  prospering  in  a  small  way, 
and  were  so  honest  and  reliable  that  one  might 
intrust  them  with  anything  he  had.  In  an- 
other instance  the  same  agency  reported  forty 
thousand  dollars  assets,  a  flourishing  cash 
business  and  nothing  known  against  the  repu- 
tation for  a  man  who,  at  the  time  the  report 
was  made,  was  a  confirmed  drunkard,  paying 
no  one  where  he  could  get  out  of  it  and  with 
a  personal  standing  which  was  almost  disrepu- 
table. These  instances  show  that  the  mercan- 
tile rating  agencies  are  not  always  reliable,  but 
while  they  make  mistakes  at  times,  their  in- 


AND  HOW  TO  JUDGE  THEM  99 

formation  is  always  to  be  sought,  and  in  the 
great  majority  of  cases  is  accurate  and  valu- 
able; but  one  cannot  rely  on  the  rating 
agencies  entirely,  because  they  would  probably 
give  a  most  adverse  report  against  a  poor  but 
honest  miner,  who  might  have  a  property  in 
his  control  out  of  which  he  could  make  a  for- 
tune for  himself,  and  others,  if  only  they  would 
intrust  a  little  money  to  him. 

Having  obtained  all  the  information  possible 
in  regard  to  the  people  -who  are  presenting  a 
mining  enterprise,  the  next  line  of  inquiry 
should  be  in  regard  to  the  economic  geologist, 
metallurgist  or  mining  engineer  who  had  ex- 
amined and  reported  on  the  property.  He 
recommends  it,  otherwise  the  promoters  would 
not  publish  his  report.  Probably  the  com- 
pany's officers  will  supply  the  record  from 
which  the  investor  can  make  his  own  inquiries 
— these  should  be  to  ascertain  what  the  per- 
son may  know,  where  he  attained  the  infor- 
mation, where  and  to  what  extent  he  has 
studied,  what  scientific  societies  have  given 
him  recognition  and  what  enterprises  he  has 
served  in  a  capacity  similar  to  the  capacity  in 
which  he  is  serving  the  enterprise  which  seeks 
the  investor's  money.  Inquiries  to  the  scien- 
tific and  technical  societies  with  which  he  may 
be  connected,  his  former  employers,  and  the 


100  MINING  INVESTMENTS 

people  with  whom  the  gentleman  may  have 
had  relations  will  show  his  character,  stand- 
ing and  abilities ;  and  give  the  investor  an  idea 
as  to  what  his  recommendations,  and  opinions 
may  be  worth. 

Here  certainly  is  a  lot  of  work  recommended 
to  the  investor  who  may  think  of  taking  a  ven- 
ture in  a  mine,  but  nothing  of  success  can  be 
had  without  work.  One  can  make  a  fortune 
through  successful  mining  investments,  but 
if  one  simply  wants  to  take  a  chance,  and  will 
invest  haphazard  through  reading  an  adver- 
tisement, or  an  unconfirmed  prospectus,  re- 
turns can  be  expected  only  if  one  is  lucky ;  and 
when  it  comes  to  playing  on  one's  luck  it  is 
just  as  well  to  visit  the  gambling  table  and 
have  some  fun  at  the  game,  for  money  is  just 
about  as  sure  to  be  lost  at  haphazard  mining 
investments  as  it  is  at  gambling. 


XI 


Conditions    Under    Which    a    Mining 
Proposition  May  be  Accepted 

Let  us  suppose  that  an  investor  has  decided 
that  it  is  worth  while  to  undertake  operations 
in  mining  stocks,  and  has  made  a  series  of  in- 
vestigations, and  has  the  facts  from  which  to 
decide  for  or  against  a  proposition;  and  has 
now  to  debate  the  situation,  to  decide  whether 
or  not  he  shall  risk  the  money.  Naturally  the 
conclusion  has  been  reached  that  there  is  noth- 
ing in  mining  which  can  be  considered  sure, 
yet  the  chances  of  gain  are  frequently  such 
that  one  should  intelligently  place  a  certain 
amount  of  one's  savings,  or  property,  at  hazard. 
It  is  not  an  investment,  it  is  simply  placing 
some  money  for  a  great  winning  in  a  propo- 
sition where  one's  intelligence  is  able  to  indi- 
cate what  the  chances  of  a  favorable  result 
may  be ;  and  the  better  chances  predominating, 
one  is  justified  in  accepting  the  risk.  Where 
conditions  are  favorable  one  should  have  found 
that  the  investigations  confirm  the  claims 
made  in  the  prospectus;  that  is,  disinterested 

101 


102  MINING  INVESTMENTS 

people  have  written  him  of  the  property,  par- 
ticularly people  living  near  it,  in  a  great  meas- 
ure confirming  what  has  been  claimed  in  the 
prospectus.  Probably  the  reports  will  not  co- 
incide exactly,  two  different  statements  never 
are  exactly  alike,  but  if  the  principal  features 
have  general  similarity  this  is  a  very  strong 
condition  in  favor  of  the  proposition. 

Through  his  bank  the  investor  will  have 
heard  that  the  general  standing  of  the  people 
connected  with  the  enterprise  is  good,  and  that 
many  people  think  well  of  the  proposition,  par- 
ticularly among  those  who  are  in  a  position  to 
come  in  direct  touch  with  it.  The  report  may 
be  that  the  people  are  of  good  local  standing, 
but  that  the  bank  officers  know  nothing  about 
the  mining  proposition;  such  a  report  can  be 
considered  as  favorable,  as  the  bank  can  at 
best  only  tell  of  local  credit,  and  may  be 
greatly  misinformed  in  matters  of  technical 
valuations. 

The  reports  on  the  property  under  advise- 
ment will  be  shown  on  inquiry  to  have  been 
prepared  by  a  man  who  bears  a  good  reputa- 
tion, and  who  has  the  technical  skill,  and  the 
information  gained  from  a  good  source  which 
enables  him  to  write  with  the  authority  of  one 
who  knows  his  subject.  A  report  from  a  man 
who  has  had  the  technical  and  scientific  train- 


AND  HOW  TO  JUDGE  THEM  103 

ing,  and  who  had  later  had  actual  and  varied 
experience,  so  that  he  can  speak  from  technical 
knowledge,  and  practical  experience,  is  the 
most  valuable.  When  this  favorable  con- 
dition has  been  found  one  can  take  the  report 
and  believe  it;  and  if  the  mine  promises  well 
the  report  should  be  considered  to  be  sufficient 
warrant  for  an  investment.  Those  who  place 
money  at  hazard  pay  too  little  attention  to  the 
report  of  a  competent  engineer  and  should  in- 
sist that  such  a  report  be  submitted  for  con- 
sideration before  taking  any  risk  in  the  propo- 
sition. If  this  were  done  and  the  records  of 
those  who  make  reports  more  carefully  looked 
up,  there  would  be  very  little  money  lost  in 
mining.  I  do  not  wish  to  say  that  a  man  who 
has  not  been  through  a  university,  but  has  at- 
tained his  knowledge  in  the  School  of  Hard 
Experience,  cannot  make  a  report  on  a  mining 
proposition;  frequently  the  reports  from  such 
men  are  the  most  valuable ;  I  do  say,  however, 
that  if  a  man  of  experience  has  the  ability  to 
pass  judgment  on  a  mining  property,  and  make 
a  report  on  it  which  may  be  accepted  with  con- 
fidence, that  man  will  have  a  record  to  which 
he  can  refer,  and  many  people  will  speak  well 
of  his  ability ;  and  if  his  record  does  not  attest 
the  value  of  his  work,  then  his  report  should 
not  be  accepted;  and  it  is  my  opinion  that  a 


104  MINING  INVESTMENTS 

man  who  has  simply  been  at  mining  for  a  con- 
siderable period  is  not  competent  to  make  a 
report  on  a  mining  proposition.  It  is  requisite 
that  a  man  should  have  been  a  careful  student, 
and  should  have  had  opportunities  to  examine 
many  different  mining  propositions  before  he 
can  report  successfully.  We  are  considering 
favorable  conditions,  and  the  reports  coming 
to  the  investor  will  be  that  the  examination  of 
the  property  has  been  made  by  a  person  worthy 
of  confidence,  both  as  to  his  integrity  and  his 
skill;  and  this  being  the  case  it  is  fair  to  put 
the  proposition  down  as  a  good  thing. 

Then  the  final  matter  of  investigation,  the 
questions  as  to  whether  the  people  offering 
the  property,  or  rather  who  are  asking  for  the 
use  of  money,  are  reliable  and  have  the  ability 
to  obtain  results.  There  is  many  a  good  mine 
gone  wrong  because  the  management  was  in- 
capable or  dishonest,  and  the  investor  should 
here  exercise  great  care  in  his  investigations. 
If  the  personal  credit  and  standing  of  the  peo- 
ple with  whom  he  is  to  intrust  his  money  is 
good  locally,  in  the  places  where  they  live, 
and  if  they  have  a  good  financial  standing, 
are  considered  good  business  men  and  have 
placed  some  of  their  own  money  in  the 
enterprise  in  which  he  is  asked  to  take  a 
risk ;  then,  if  it  is  shown  by  the  investigations, 


ANIT  HOW  TO  JUDGE  THEM          105 

that  these  people  know  what  they  are  talking 
about,  and  have  been  in  mining  as  a  business; 
or,  at  least,  that  some  of  those  who  are  man- 
aging the  proposition  do  know  mining  and 
have  made  money  at  it,  then  the  supposition 
is  fair  that  they  will  be  able  to  make  still  more 
money,  and  they  being  found  both  honest  and 
capable  one  may  expect  to  make  money  with 
them. 

All  these  considerations  being  favorable  one 
is  ready  to  take  the  investment,  and  it  is  only  a 
question  of  the  price  which  he  should  pay  for 
the  stock.  It  is  supposed  that  the  property  is 
free  from  debt  and  the  title  held  clear  for  the 
stockholders,  unencumbered  by  liens,  con- 
ditions, mortgages  or  obligations  to  be  per- 
formed; because  where  these  are  found  a 
strong  element  exists  against  the  chances  for 
success,  and  if  the  proposition  is  accepted  with 
such  incumbrances  the  price  paid  for  the  stock 
must  be  much  lower  than  would  be  paid  in  a 
free  and  clear  proposition.  Still  if  the  other 
conditions  are  favorable,  a  good  local  credit,  a 
good  report  on  the  property  made  by  a  com- 
petent man;  and  the  proposition  being  in  the 
hands  of  honest,  capable  and  experienced  peo- 
ple, it  certainly  is  favorable  to  take  a  chance 
with  them,  and  the  only  question  to  consider 
is  that  of  price.  The  investor  will  have  made 


106  MINING  INVESTMENTS 

a  calculation  of  the  present  worth,  that  is  the 
actual  value  of  the  property  for  cash,  and  will 
have  compared  it  with  the  prices  asked  for 
similar  property.  He  will  have  seen  how  the 
present  condition  of  the  proposition  compares 
with  the  former  conditions  of  other  com- 
panies when  they  were  being  promoted,  and 
he  will  have  decided  whether  the  price  asked 
for  the  shares  beyond  the  actual  cash,  or  pres- 
ent worth  value  of  the  property,  is  too  much 
to  pay  for  the  prospective  values,  and  the  ex- 
pectations. This  difference  is  to  be  put  into 
work  in  the  property,  and  will  improve  its 
value,  naturally  so;  and  the  proposition  being 
in  honest,  capable  hands,  with  experienced  peo- 
ple as  managers,  the  expectation  is  reasonable 
that  it  will  be  well  expended,  and  that  the  in- 
vestor will  obtain  the  benefit.  But  how  much 
is  he  to  make?  That  the  money  he  is  placing 
will  benefit  the  property  is  plain  enough,  but 
if  it  benefits  it  only  to  such  an  extent  that  the 
investor  simply  has  the  value  of  his  money, 
then  there  is  no  profit,  and  one  goes  into  min- 
ing for  profits.  To  double  one's  money  should 
be  very  ordinary,  to  make  five  hundred  or  even 
a  thousand  per  cent,  on  mining  risks  carefully 
considered  should  not  be  rare.  If  it  is  found 
by  the  investor  that  the  expenditure  of  his 
money  on  the  property  is  probably  to  im- 


AND  HOW  TO  JUDGE  THEM  10? 

prove  it  so  that  he  will  obtain  at  least  an  indi- 
cate profit  of  one  hundred  per  cent,  with  proba- 
bilities that  it  will  be  even  more,  then  the 
proposition  is  a  fair  one,  and  he  can  put  his 
money  in  against  the  work  which  has  been 
done  in  acquiring  the  property,  and  the  chances 
are  decidedly  in  his  favor.  Naturally  it  is  so, 
for  if  the  proposition  is  found  to  have  a  good 
local  credit;  to  have  been  reported  on  favor- 
ably by  a  competent,  experienced  man;  to  be 
in  the  hands  of  honorable,  capable,  experi- 
enced and  trustworthy  people,  who  under- 
stand the  business;  and  if  the  price  asked  is 
one  which  admits  of  large  profits  then,  where 
is  the  risk?  In  truth  there  isn't  any,  but  the 
price  of  selecting  such  a  good  investment  is 
that  one  should  take  the  time  and  trouble  to 
make  the  investigations.  The  reward  will  be 
a  share  of  the  great  wealth  made  in  mining, 
because  the  investor  will,  if  he  exercises  cau- 
tion and  good  judgment,  be  certain  to  obtain  a 
share  in  good  propositions.  One  must  do  the 
work  of  making  the  investigations,  however, 
and  accept  only  facts,  not  hearsay  evidence,  in 
coming  to  a  decision. 


XII 

Conditions    Under    Which    a    Mining 
Proposition  Should  be  Rejected 

One  can  reject  a  mining  proposition  in  short 
order,  and  one  short  chapter  is  sufficient  to  in- 
dicate conditions,  any  of  which  should  be  war- 
rant enough  for  declining  to  take  an  interest 
in  such  a  proposition.  The  investor  would  prob- 
ably find  a  means  for  making  inquiries  through 
his  bank  as  recommended,  and  would  first 
learn  of  the  local  standing  of  the  proposition, 
and  the  men  connected  with  it.  If  word  comes 
back  that  the  proposition  has  a  bad,  or  ques- 
tionable reputation,  and  the  people  connected 
with  it  are  not  held  in  respect  among  their 
neighbors,  it  will  be  very  safe  to  let  the  mat- 
ter entirely  alone,  and  refuse  to  invest  at  any 
price,  no  matter  what  inducements  may  be 
offered. 

Another  condition  which  would  be  sufficient 
to  warrant  one  in  declining  absolutely  to  have 
anything  to  do  with  an  enterprise  is,  where  the 
prospectus,  and  published  reports,  do  not  agree 
with  other  accounts  of  the  property  which  may 

109 


110  MINING  INVESTMENTS 

be  had  from  parties  living  near  it.  Of  course 
no  two  accounts  will  agree  exactly,  but  if  there 
is  a  decided  discrepancy,  and  the  reports 
offered  by  the  parties  interested  in  the  pro- 
motion are  very  much  better  than  any  one 
else  will  be  willing  to  say  for  the  property,  ex- 
aggerated and  misleading  statements  can  be 
suspected,  and  the  trustworthiness  of  the 
whole  proposition  placed  in  doubt,  and  one  had 
better  be  careful  and  have  nothing  to  do  with  it. 

If  it  is  found  on  investigation  that  the  prop- 
erty is  not  free  and  clear,  but  is  incumbered 
with  debts,  liens  and  contingent  clauses  affect- 
ing the  title;  conditions  which  have  not  been 
clearly  stated  in  the  prospectus,  then  fraud 
may  be  suspected,  and  certainly  one  would  not 
want  such  an  investment. 

If  it  is  found  on  receiving  the  reports  from 
the  mercantile  agencies  that  the  people  offer- 
ing the  stock  have  been  connected  with  ques- 
tionable enterprises,  or  are  not  of  good  busi- 
ness reputation,  then  the  danger  flag  has  been 
found  and  should  deter  any  one  from  making 
an  investment. 

The  other  conditions  under  which  a  propo- 
sition should  be  rejected  are  not  so  clear  and 
will  very  much  depend  on  the  personal  opin- 
ion  of  the  investor.  He  must  form  his  own 
judgment  as  to  the  condition  of  the  property 


AND  HOW  TO  JUDGE  THEM  111 

when  he  is  asked  to  invest,  and  how  it  com- 
pares with  the  conditions  which  were  found  to 
have  been  reported  in  regard  to  mines  which 
have  turned  out  well,  but  which  were,  of 
course,  once  in  their  prospect  stages  of  de- 
velopment. Here  one  must  exercise  judgment, 
and  must  read  the  accounts  and  reports  of 
mines  which  have  turned  out  well,  and  judge 
what  the  prospect  may  be  for  the  mine  in 
which  he  may  be  asked  to  invest.  In  this  the 
investor  must  rely  very  much  on  others,  and 
must  look  up  the  record  of  the  man  who  makes 
the  reports  recommending  the  property.  If  it 
is  found  that  he  has  reported  on  properties 
which  have  turned  out  badly,  after  he  had 
recommended  them;  if  it  is  found  that  he  is  a 
man  of  questionable  reputation;  if  it  is  found 
that  he  is  not  a  disinterested  party,  but  owns 
part  or  all  of  the  property  he  recommends,  and 
his  recommendation  is  not  confirmed  by  others ; 
and  if  it  is  found  that  he  had  not  had  the  ad- 
vantages of  special  training,  or  wide  experi- 
ence in  mining  property,  it  will  be  safer  not 
to  risk  money  in  the  venture ;  especially  if  the 
proposition  is  one  where  ore  is  not  much  in 
evidence  but  it  is  hoped  and  expected  that  min-. 
ing  operations  will  open  up  mineral  deposits 
which  will  be  valuable. 

Most  mines  are  failures  because  a  mistake 


112  MINING  INVESTMENTS 

has  been  made,  or  expectations  have  not  been 
realized  in  regard  to  the  supplies  of  ore;  and 
unless  the  proposition  makes  a  very  good 
showing  and  has  been  reported  on  favorably 
by  qualified  men  the  chances  of  losing  are 
much  greater  than  are  the  chances  of  making 
a  profit. 

All  mines  go  through  a  struggle  to  find  ma- 
chinery which  will  treat  the  ores  successfully, 
and  often  years  are  occupied  and  hundreds  of 
thousands  of  dollars  expended  before  a  suit- 
able plant  can  be  constructed,  and  profits 
made;  this  period  of  disappointment  during 
the  development  must  be  expected  and  is  not  a 
reason  for  turning  away  from  the  enterprise. 
If,  however,  the  investor  finds  that  tendency 
of  the  management  is  to  hurry  the  equipment 
before  they  have  opened  the  property,  and 
know  how  much  ore  they  have  available,  it  is 
well  to  remember  that  undue  haste  leads  to 
disaster  in  mining.  As  most  mining  propo- 
sitions are  failures,  one  must  remember  and 
study  the  circumstances  which  have  brought 
about  these  failures,  and  form  his  judgment  as 
to  whether  the  risk  shall  be  accepted  or  re- 
jected. Of  the  propositions  offered,  certainly 
the  great  majority  are  to  be  rejected.  Of  course 
one  wants  nothing  to  do  with  enterprises  which 
are  simply  to  sell  stock  and  one  can  detect 


AND  HOW  TO  JUDGE  THEM  113 

these  as  noted  in  a  previous  chapter,  and  natu- 
rally will  let  them  alone;  still  this  may  not  be 
an  important  part  of  the  investigation,  because 
a  scheme  to  sell  stock  in  a  property  not  worthy 
of  the  investment  will  only  be  proposed  by 
dishonest  people,  and  the  bank  reports,  with 
commercial  agency  statements,  will  give  the 
necessary  information  and  enable  one  to  avoid 
dishonest  propositions. 

Then,  finally,  the  question  as  to  the  price 
asked  for  the  shares  must  be  considered.  The 
best  mine  in  the  world  might  be  undesirable 
if  the  price  placed  on  the  shares  were  one 
which  would  not  give  a  fair  mining  profit  to 
the  investor,  and  a  mining  profit  is  a  very  large 
profit;  such  shares  should  not  be  purchased. 
These  are  usually  put  in  the  public  markets, 
and  the  prices  advanced  up,  and  up,  to  attract 
buyers;  but  the  investor  should  consider  only 
values  and  multiply  the  number  of  shares  in 
the  whole  mining  company  by  the  price  quoted 
per  share,  and  then  consider  whether  the  mine 
is  worth  that  much,  and  if  the  price  seems  ex- 
cessive let  the  proposition  alone. 

Similarly,  having  deducted  the  estimated 
present  worth,  or  real  salable  values  from  the 
shares,  as  per  the  formula  previously  stated, 
and  found  the  difference  which  is  the  price 
asked  for  the  prospective  values ;  and  if  this  is 


114  MINING  INVESTMENTS 

found  to  be  more  than  the  situation  warrants, 
or  is  greater  than  the  rate  generally  quoted 
for  other  mining  properties,  it  is  better  not  to 
take  the  proposition,  because  where  one  pays 
too  much  one  is  not  likely  to  obtain  a  due 
profit. 

As  to  investing  in  companies  managed  by 
doctors  of  medicine,  ministers  and  others, 
usually  it  is  best  not  to  do  so,  but  there  are 
often  exceptions,  especially  where  the  manager 
has  been  shrewd  enough  to  surround  himself 
with  competent,  reliable  men. 

Finally,  where  anything  looks  doubtful  and 
the  statements  are  not  clear,  and  businesslike, 
and  the  managers  take  offense  and  object  to  a 
careful  investigation  when  it  is  proposed;  it 
is  better  not  to  go  into  the  deal  with  them, 
because  most  mines  are  failures  anyway  and 
it  is  only  by  selecting  the  very  best  that  one 
can  expect  to  make  money. 

In  these  chapters  nothing  is  said  about  divi- 
dend paying  mines,  because  one  is  not  solicited 
to  invest  in  such  property.  Established  com- 
panies rarely  issue  a  prospectus,  and  the  specu- 
lation and  big  profits  in  mining  are  made  by 
getting  in  on  the  new  propositions  which  are 
desirable  but  cheap  because  in  their  initial 
stages  of  development. 

The  two  propositions — investment  in  estab- 


AND  HOW  TO  JUDGE  THEM  115 

lished  mines  and  investment  in  new  specula- 
tions— are  so  different  that  they  must  be 
treated  separately. 


XIII 

Investments  in  Dividend  Paying  Mining 
Stocks 

When  one  considers  an  investment  in  divi- 
dend-paying mining  stocks  it  is  usually  all  a 
question  of  price ;  not  entirely  so,  however,  be- 
cause it  sometimes  happens  that  wideiy  adver- 
tised offerings  of  dividend-paying  mining 
stocks  turn  out  to  be  the  worst  kind  of 
swindles;  the  dividend,  so  called,  being  simply 
repayments  of  a  small  proportion  of  the  money 
received  from  the  sale  of  stock.  This  is  a  thor- 
oughly dishonest  practice  and  one  distinctly 
forbidden  by  the  law;  it  is  done,  however,  and 
there  are  many  subterfuges  to  hide  the  real 
character  of  the  payment.  A  common  form  is 
for  the  promoters  to  make  transactions  among 
themselves  which  will  show  a  paper  profit  and 
then  declare  a  dividend,  but  in  reality  pay  it 
only  to  a  portion  of  the  stock,  that  is  to  a  few 
shares  which  they  may  have  sold;  the  amount 
required  is  not  large,  because  only  a  few  shares 
have  been  disposed  of  and  the  stock  which  they 
hold  really  receives  no  dividend,  the  promoters 
117 


118  MINING  INVESTMENTS 

sign  a  receipt  for  it,  and  to  all  appearance  it  has 
been  paid.  On  the  strength  of  this  dividend 
the  stock  becomes  salable,  and  presently  when 
the  promoters  have  sold  what  they  consider 
sufficient,  the  stock  is  left  to  shift  for  itself  and 
no  more  dividends  are  paid.  Under  one  form 
or  another,  with  better  or  more  crude  conceal- 
ment and  manipulation,  this  game  is  being  fre- 
quently worked,  and  many  are  defrauded  by  it. 
The  means  by  which  an  investor  can  protect 
himself  are  very  simple.  If  a  property  is  really 
earning  dividends  active  operations  must  be  in 
progress  at  the  mines,  and  accounts  of  sales  of 
ore  will  be  in  evidence ;  or  returns  from  bullion, 
metal  or  mineral  sales  will  be  at  hand  and  there 
will  be  some  system  of  bookkeeping.  A  com- 
pany honestly  managed  should  make  no  ob- 
jection to  submitting  proofs  that  its  dividends 
are  really  earned,  and  where  objection  is  made 
one  can  refrain  from  investing.  The  same  care 
should  be  taken  in  looking  up  the  standing  of 
officers  and  of  the  enterprise  itself,  as  would  be 
taken  if  it  were  an  untried  speculative  venture ; 
and  where  it  is  found  that  the  enterprise  is  in 
the  hands  of  questionable  people  it  should  be 
let  alone,  no  matter  how  much  may  be  paid  in 
dividends,  no  matter  how  active  the  stock  may 
be  in  the  public  markets;  such  activity  is  no 
criterion  of  real  conditions,  and  may  be  entirely 


AND  HOW  TO  JUDGE  THEM  119 

the  outcome  of  clever  manipulations  on  the 
part  of  the  promoters.  There  is  just  one  thing 
for  an  investor  to  do  in  relation  to  a  propo- 
sition found  in  the  hands  of  people  of  question- 
able reputation,  and  that  is,  let  it  alone. 

When  it  is  found,  however,  that  a  property 
is  really  in  operation,  and  is  earning  dividends, 
then  it  may  be  a  very  attractive  proposition 
for  an  investment,  but  it  is  all  in  the  price.  A 
mining  stock  should  pay  a  high  rate  of  dividend, 
because  if  an  investor  does  not  get  his  money 
back,  and  a  profit  out  of  the  dividends,  the  in- 
vestment is  a  loss  to  him.  The  reason  is  that 
all  mines  must  come  to  an  end  some  time,  even 
the  greatest,  and  when  the  end  has  been 
reached,  and  all  the  «j>re  taken  out,  the  mine  is 
worthless.  The  question  is,  how  long  can  the 
mine  keep  on  paying  dividends,  and  how  far 
away  is  the  period  when  it  will  be  worked  out 
and  worthless?  The  world  is  full  of  worked 
out  mines,  and  as  all  must  come  to  an  end  the 
investor  should  consider  the  end,  not  the  pres- 
ent of  a  mining  investment. 

If  a  stock  is  bought  at  a  price  which  will 
net  the  investor  twenty  per  cent,  a  year  in  divi- 
dends, the  rate  would  certainly  look  attractive. 
But  the  rate  of  dividend  alone  is  not  sufficient 
to  warrant  an  investment,  one  must  be  reason- 
ably sure  that  the  mine  contains  mineral 


120  MINING  INVESTMENTS 

enough  to  keep  the  dividend  payments  going 
for  a  period  sufficiently  long  to  return  the 
money  invested  and  yield  a  profit.  At  twenty 
per  cent,  per  annum  one's  money  will  be  re- 
turned in  five  years,  at  ten  per  cent,  per  an- 
num one's  money  will  be  returned  in  ten  years, 
and  at  five  per  cent,  per  annum  the  money  will 
have  to  remain  out. for  twenty  years  before 
there  is  any  profit,  and  only  a  few  mines  have 
paid  for  so  long  a  period. 

It  seems  reasonable  that  a  stock  in  an  ordi- 
nary mine  paying  a  net  return  of  only  five  per 
cent,  is  selling  too  high,  but  that  when  the  rate 
is  between  ten  per  cent,  and  twenty  per  cent, 
the  proposition  is  more  attractive,  and  more 
nearly  on  a  normal  basis  of  compensation  for 
the  risk  involved. 

Dividend-paying  stocks  are  usually  not 
offered  for  public  subscription,  and  most  of 
them  have  regular  quotations  in  the  .stock 
markets  at  which  an  investor  can  either  buy 
or  sell,  and  with  such  stocks  the  opportunities 
for  speculation  are  very  attractive.  The  mar.- 
kets  for  such  shares  are  rarely  very  broad,  and 
they  are  for  this  reason  extremely  sensitive  to 
changes  of  market  conditions,  and  their  fluctu- 
ations are  frequently  in  a  wide  range.  In 
making  speculative  purchases  of  mining  stocks 
in  the  open  markets  one  should  be  governed, 


AND  HOW  TO  JUDGE  THEM  121 

not  by  the  fluctuations,  so  much  as  by  the  esti- 
mate he  may  have  placed  on  the  actual  worth 
of  the  property.  If  one  will  do  the  work,  and 
make  the  investigations  which  will  give  the 
true  conditions  at  the  properties  he  may  think 
worthy  of  attention,  and  then  having  obtained 
the  facts  compare  the  prices  for  the  shares 
with  the  average  prices  of  similar  propositions, 
and  having  determined  the  worth,  the  investor 
is  in  a  position  to  buy  whenever  the  prices  are 
below  the  worth  which  he  may  have  estimated, 
and  sell  when  the  price  is  greater  than  the 
worth,  but  always  it  must  be  remembered  that 
to  put  money  in  any  mining  proposition  where 
the  management  is  not  thoroughly  reliable  and 
capable  is  to  place  it  at  a  double  risk,  where 
the  odds  are  too  much  against  the  investor. 

Where  a  speculation  develops  in  a  mining 
stock,  and  it  begins  to  assume  activity,  and 
move  up  to  better  levels  day  by  day,  one  can 
suspect  manipulation;  such  has  been  seen  re- 
cently in  several  stocks,  and  one  should  pay  no 
attention  to  it.  By  all  the  signs  some  one  is 
out  to  unload  stock  on  careless  investors,  and 
presently  those  who  have  engineered  the 
manipulation  will  withdraw  from  the  market, 
and  go  about  with  a  broad  smile,  and  sneer  for 
the  credulous,  telling  how  they  have  made  a 
killing.  It  is  the  same  old  story  of  the  faker 


122  MINING  INVESTMENTS 

at  a  country  fair  selling  watches,  only  in  a  dif- 
ferent form.  The  faker  offered  watches  at  50 
cents  each,  saying  that  the  next  day  he  would 
sell  the  same  watches  for  a  dollar  and  take 
back  any  he  had  sold  for  fifty  cents  at  the  price 
of  the  day,  one  dollar.  The  next  day  the 
watches  were  offered  for  a  dollar,  and  anyone 
who  had  bought  at  fifty  cents  could  get  a  dollar 
for  his  watch.  The  business  being  completed 
the  faker  then  offered  watches,  as  many  as 
people  wanted,  at  one  dollar  each,  saying  that 
next  day  he  would  sell  at  two  dollars  and  take 
back  watches  at  the  same  rate.  This  he  did 
and  then  announced  that  next  day  he  would 
sell  at  four  dollars  and  pay  four  dollars  for  any 
watches  he  had  sold,  and  people  bought  freely 
at  two  dollars.  When  the  next  day  came  the 
faker  kept  his  word,  took  back  the  watches 
at  four  dollars,  and  then  announced  that  he 
would  sell  as  many  as  people  wanted  to  buy  at 
four  dollars,  and  if  they  were  not  satisfied, 
take  them  back  at  his  selling  price  for  the  next 
day,  which  would  be  eight  dollars.  He  as- 
sured the  people  that  his  only  object  was  to 
advertise  the  watches,  the  manufacturers 
knowing  that  on  account  of  the  superior  qual- 
ity of  the  watches  they  would  by  this  simple 
means  of  making  the  people  handle  them,  and 
see  their  merits,  secure  the  good  will  of  the 


AND  HOW  TO  JUDGE  THEM  123 

neighborhood  and  a  permanent  trade.  It  was 
a  plausible  story  and  the  people  bought  in  great 
numbers  at  four  dollars  each.  That  night  the 
faker  packed  his  grip  and  went  away,  leaving 
the  people  stacked  up  with  dollar  watches  for 
which  they  had  paid  four  dollars.  The  sup- 
port had  been  withdrawn  from  the  market,  just 
as  it  is  in  fact,  though  in  a  different  form, 
withdrawn  from  the  stock  market  when  the 
manipulator  has  sold  out  at  a  price  satisfactory 
to  himself,  after  spreading  the  report  that  he 
would  presently  be  selling  at  a  higher  price, 
and  would  take  back  any  stock  which  might  be 
offered  at  the  higher  figure.  In  one  form  or  an- 
other this  game  is  constantly  being  played  in 
the  open  stock  market,  often  so  cleverly  ad- 
justed and  concealed  that  the  manipulation 
looks  even  to  the  best  informed  like  a  real  de- 
velopment of  values,  but  the  result  is  always 
the  same,  the  manipulators  finally  obtain  a  kill- 
ing, and  having  secured  a  large  price  leave  the 
purchasers  to  their  fate,  and  the  market  be- 
comes unsteady,  flounders  to  lower  quotations, 
in  some  cases  goes  out  of  sight  altogether, 
and  the  stocks  become  unsalable. 

In  mining  stock  operations  there  is  just  one 
thing  to  study  and  that  is  actual  values ;  on  any 
other  basis  than  buying  when  the  prices  are 
depressed  below  actual  values,  and  selling 


124  MINING  INVESTMENTS  ' 

when  they  advance  above  them,  one  will  cer- 
tainly be  left  in  the  lurch.  The  skill  is  in  de- 
termining what  the  actual  values  are,  and  to 
do  this  one  must  make  a  careful  study  of  all 
the  information  available. 


XIV 

The  Spirit  of  Adventure  and  Specula- 
tion.     What   Some    Have  Gained 
and  What  Others  Have  Lost 

Luxurious  in  the  metropolis  lives  a  man 
with  everything  his  whim  or  fancy  can  desire, 
if  only  the  purchasing  power  of  money  can  ob- 
tain it.  Riches  are  his,  gained  from  the  mines, 
and  fair  fortune  smiles  upon  his  happy  life. 
On  the  western  plains  is  a  human  skull, 
bleached,  and  white  in  the  sun;  ghastly  in  the 
pale  light  of  the  moon;  a  toad  has  made  his 
refuge  in  it  secure  in  the  silence  of  the  desert, 
and  it  is  nothing;  the  man  lost  his  all,  and  his 
life  was  a  sacrifice  to  fortune,  he  sought  for 
mines  and  had  no  reward.  These  are  the  ex- 
tremes, the  prize  to  one,  the  penalty  to  the 
other.  Who  goes  a  searching  after  mines? 
The  spirit  of  adventure  and  speculation  stirs 
always  in  the  human  soul,  desire,  triumph  and 
achievement ;  or  desire,  hardships  and  failure — 
perhaps  death ;  one  is  the  penalty,  the  other  the 
reward.  Is  it  worth  while?  Perhaps,  at  any 
125 


126  MINING  INVESTMENTS 

rate  men  will  always  take  the  risk,  that  is  some 
men;  and  when  an  excited  prospector  presents 
himself  before  those  who  might  take  a  chance 
with  him  in  the  property  he  has  found,  or 
thinks  he  has  found,  is  it  a  great  thing  that 
one  should  risk  a  little  money  to  test  a  prop- 
erty, which  may  have  been  obtained  after  years 
of  hardship,  exposure  and  danger.  My  belief 
is  that  where  a  miner  who  has  done  honest 
work,  has  really  searched  and  prospected,  and 
can  show  a  record  which  would  entitle  him  to 
confidence,  and  presents  himself  to  people  with 
capital,  saying  that  at  last  he  has  found  a 
prize,  then  his  story  should  have  ready  listen- 
ers, and  it  ought  not  to  be  so  hard  for  him  to 
secure  the  money  to  prove  up  what  he  has 
found.  To  take  a  chance  at  first  hands  with 
those  who  prospect  for  mines  is  a  most  at- 
tractive form  of  speculation,  that  is,  where  the 
prospector  has  succeeded  in  finding  something 
which  promises  to  develop  values.  To  grub 
stake  a  prospector,  meaning  to  give  him  the 
supplies  which  will  permit  of  explorations  to 
find  mineral  deposits,  is  playing  simply  on  a 
chance,  and  may  or  may  not  be  good  business ; 
but  where  the  prospector  has  found  a  mine  it 
is  a  very  different  proposition,  and  one  might 
well  take  the  risk. 
To  tell  of  great  individual  fortunes  which 


AND  HOW  TO  JUDGE  THEM  127 

have  been  made  at  mining  is  not  of  interest  to 
our  subject,  we  are  treating  of  that  which  an 
investor  could  do  and  what  he  should  do  in 
the  spirit  of  adventure  and  speculation,  to  risk 
a  little  for  gains  in  volume.  Only  one  must 
risk  with  judgment,  but  a  risk  one  must  take 
if  one  would  share  in  the  hidden  wealth  of 
mining  regions. 

In  considering  what  some  have  gained,  the 
copper  deposits  of  Michigan  may  have  a  promi- 
nent place  in  one's  thoughts,  for  there  are  the 
accounts  of  how  hunters  and  adventurers, 
years  ago,  brought  back  stories  of  great  ex- 
posure of  pure  copper;  some  said  mountains 
of  pure  metal  exposed  in  the  forest  lands  of 
the  little  known  northern  peninsula  of  Michi- 
gan. Occasionally  people  gave  heed  to  these 
stories,  most  held  them  in  derision,  but  those 
who  gave  heed  sent  and  secured  the' properties. 
Then  came  the  struggle  to  obtain  funds  and 
it  is  said  that  stock  in  the  great  Calumet  and 
Hecla  mine  went  begging  for  purchasers  at  but 
a  fraction  of  its  par.  It  was  a  struggle  of  some 
years,  but  in  the  end  those  who  had  ventured 
were  triumphant ;  and  rumor,  on  well  founded 
information,  has  it,  that  some  of  those  who 
were  first  to  take  the  risk  have  had  a  compe- 
tence for  themselves  and  for  their  children  out 
of  small  amounts  invested  in  Michigan.  Surely 


128  MINING  INVESTMENTS 

a  good  compensation  for  the  risk.  Not  only 
the  Calumet  and  Hecla  but  other  great  mines 
were  developed.  Then  when  some  had  secured 
the  prizes  a  speculation  developed;  great  was 
Michigan,  copper  was  reported  to  be  every- 
where, and  copper  companies,  exploration 
syndicates  and  mining  enterprises  sprang  up 
in  numbers;  people  bought,  and  speculation 
ran  a  turbulent  course ;  but  the  cream  had  been 
secured,  most  of  the  latter  propositions  had  no 
value  and  they  who  went  a  trailing  after  where 
others  had  been  first,  lost  money,  and  some 
were  ruined. 

This  is  a  condition  which  should  be  empha- 
sized in  one's  thoughts;  the  money  is  in  the 
new  discoveries,  the  big  money;  the  rare  re- 
turns which  give  a  competency  for  a  small  in- 
vestment put  at  risk.  Always  it  has  transpired 
that  where  a  great  discovery  is  made  a  swarm 
of  speculative  enterprises  follow  after,  the  pro- 
moters stating  that  their  mines  are  just  adjoin- 
ing, or  just  in  line  with,  some  well  known  im- 
portant proposition  and  mining  discovery. 
Wherever  there  is  a  great  mine  the  country 
all  about  it  will  show  indications  of  mineral; 
these  in  most  instances  do  not  lead  to  new 
mines,  but  simply  point  to  the  great  mine 
which  has  been  discovered.  The  district  natu- 
rally has  fame  because  some  two  or  three,  per- 


AND  HOW  TO  JUDGE  THEM  129 

haps  more,  mining  companies  have  occupied  it 
and  are  making  great  strides  at  uncovering 
rich  ores;  the  press  is  filled  with  accounts  of 
their  great  doings,  the  well  advertised  situation 
is  such  that  any  property  in  the  famous  dis- 
trict can  find  purchasers  for  shares ;  the  mines 
offered  are  just  next  to,  or  near  the  great  dis- 
coveries, what  an  opportunity!  Thousands  of 
late  comers  purchase,  and  lose  their  money. 
There  is  little  use  in  trailing  after  a  great  dis- 
covery, better  get  in  on  the  great  discovery  it- 
self, even  at  an  excessive  price,  than  to  risk 
money  on  cheap  trailers;  but  the  conservative 
thing  to  do  is  to  recognize  that  the  discovery 
has  been  made  and  that  others  have  it;  then 
keep  on  the  watch  for  announcements  of  new 
fields,  and  when  such  are  first  brought  forward 
be  quick  to  investigate,  and  if  the  outlook 
promises  well,  and  is  in  honest  hands,  be 
among  those  who  get  in  first. 

This  condition  of  profit  to  the  first  comers 
and  losses  for  all  who  follow  after  is  illustrated 
in  so  many  places  that  one  can  consider  it  a 
fact  almost  beyond  dispute  that  profits  are  only 
for  the  early  comers,  generally  speaking,  of 
course,  but  in  most  cases  it  is  a  fact;  and, 
naturally,  those  who  get  in  first  obtain  the  pick 
of  anything  the  district  may  afford.  In  this 
there  are  many  illustrations.  A  great  excite- 


130  MINING  INVESTMENTS 

ment  was  developed  when  gold  was  given 
prominence  in  California,  and  millions  upon 
millions  were  made  by  those  who  had  the  first 
propositions  in  the  different  mining  districts; 
and  since  then  millions  upon  millions  have  been 
lost  by  others  following  where  the  first  suc- 
cesses had  been  made.  California  is  a  great 
state  and  new  mining  districts  will  probably 
be  discovered  and  then  the  history  will  be  re- 
peated; good  luck  to  those  who  get  in  first. 

Later  came  the  discoveries  of  oil  in  Pennsyl- 
vania with  millions  made,  and  then  millions 
lost  by  late  investors. 

Then  came  the  southern  coal  and  iron  lands 
with  the  same  results,  the  iron  discoveries  in 
Michigan,  the  mining  regions  of  Colorado,  the 
copper  zone  in  Montana,  the  great  copper  belt 
in  Arizona  and  New  Mexico,  the  excitement 
following  the  discovery  of  gold  in  Alaska,  and 
the  lives  of  thousands  lost  in  trailing  after 
those  who  had  the  prizes.  Today  we  are  having 
the  splendid  developments  in  Nevada,  where 
some  few  great  mines  have  made,  and  are 
making  fortunes  for  the  possessors,  while  hun- 
dreds of  trailers  are  yapping  out  their  wares 
and  millions  are  being  lost  in  expectations 
based  on  a  supposition  that  mineral  forma- 
tions are  of  such  great  extent  that  all  the  nu- 
merous companies  must  have  valuable  propo- 


AND  HOW  TO  JUDGE  THEM  131 

sitions.  The  same  situation  has  developed  in 
Canada,  and  will  probably  develop  in  re- 
lation to  Mexican  mines  where  some  remark- 
able developments  are  taking  place.  History 
will  repeat  itself,  a  few  great  mines  will  be 
found  to  have  enormous  value,  and  those  who 
have  invested  in  the  second  rate  propositions 
will  find  their  ventures  resulting  in  a  series  of 
grievous  losses. 

Whatever  the  spirit  of  adventure  and  specu- 
lation may  move  one  to  attempt,  one  should  re- 
member that  those  who  have  made  money  in 
any  district  have  been  in  on  the  main  ledge, 
the  principal  deposits,  and  that  is  the  place 
where  one  should  have  investments  if  one  ex- 
pects to  make  money  in  mining. 


XV 

The  Mining  Regions  of  the  World  and 
the  Opportunities  They  Offer 

Having  considered  that  in  recently  discov- 
ered mining  regions  the  speculative  opportuni- 
ties are  greatest,  the  thought  naturally  presents 
itself  as  to  where  such  locations  may  be,  hence 
a  chapter  written  on  a  great  subject;  which 
could  occupy  a  volume,  but  seeks  only  to  give 
an  outline  which  may  be  of  some  service  in 
that  a  little  data,  an  outline  of  the  geology  of 
the  world,  a  few  statements  in  regard  to  its 
universal  wealth,  and  of  the  places  where 
mines  are  worked  may  give  some  idea  of  ex- 
pectations in  regard  to  future  developments. 

Certainly  many  changes  have  taken  place 
in  this  earth  during  the  passing  of  the  ages  of 
its  development,  and  in  spite  of  the  many  dis- 
putes among  scientists  and  theologians,  the 
brief  account  in  the  Book  of  Genesis  must  be 
considered  the  most  logical.  In  the  six  days, 
or  six  periods  of  time,  is  given  an  outline  of 
genetic  development  which  is  confirmed  by  the 

133 


134  MINING  INVESTMENTS 

geological  formations  in  some  measure;  and 
this  confirmation  logically  connects  itself  with, 
and  supports,  that  which  is  more  obscure  in 
the  biblical  narrative.  We  have  only  to  deal 
with  the  days  or  periods  since  dry  land  ap- 
peared, for,  with  the  appearance  of  land  began 
the  formation  of  mineral  deposits  as  we  know 
them.  It  may  be  that  remnants  of  the  first 
continents  still  exist  among  the  Archean  rocks, 
which  are  those  of  oldest  formation,  though  it 
is  more  probable  that  all  the  exposure  of 
Archean  rocks  now  on  the  surface  were  at  the 
first  appearance  of  the  land  far  below  the 
original  exposures ;  which  must  have  long  since 
been  eroded  away,  and  it  is  scarcely  probable 
that  a  single  bit  of  the  first  exposure  remains 
as  it  was  when  land  first  appeared,  for  all  has 
changed;  and  during  this  process  of  alteration 
mineral  deposits  have  been  formed,  and  great 
stratifications  of  rocks  to  make  earth's  conti- 
nents have  been  developed. 

The  oldest  or  Archean  rocks  occupy  princi- 
pally the  north,  a  great  stretch  of  country  from 
northeastern  United  States  over  into  Canada, 
to  Labrador  and  to  the  arctic  regions.  East- 
ward Archean  formations  occupy  the  northern 
part  of  Great  Britain,  Scandanavia,  Northern 
Russia,  the  Ural  mountain  regions ;  further  east- 
ward into  Siberia,  among  the  Altai  mountains 


AND  HOW  TO  JUDGE  THEM  135 

and  probably  portions  of  Alaska.  A  series  of 
Archean  formations  circling  the  northern  por- 
tions of  the  globe.  In  southern  regions  por- 
tions of  the  mountains  surrounding  Africa,  and 
portions  of  the  mountains  in  the  north  of  South 
America  are  of  Archean  formation.  Associated 
with  the  Archean  formations  are  the  stretches 
of  pre- Cambrian  developments  occupying  the 
same  general  range,  and  formed  in  ancient 
sediments  and  crystalline  rocks  developed  from 
the  sediments  of  the  archean  erosions.  These 
are  frequently  found  as  crystalline  schists  of 
which  the  rocks  in  New  York  City  may  be 
taken  as  a  good  example.  Associated  with  the 
pre-Cambrian  are  many  ancient  mountains  and 
a  great  portion  of  the  uplifted  ranges  of  eastern 
United  States,  and  some  portions  of  the  Rocky 
and  Andes  mountains  which  were  then  prob- 
ably a  series  of  islands.  Portions  of  the  moun- 
tains of  Central  Europe  are  probably  pre- 
Cambrian,  and  a  large  part  of  the  mountains 
surrounding  Africa  may  be  referred  to  this 
period,  and  probably  a  series  of  islands  were 
then  developing  along  regions'  now  occupied 
by  the  great  mountain  ranges  of  Central  Asia. 
The  sea  was  retreating  then  as  it  is  retreating 
now,  but  in  pre-Cambrian  ages  there  were  only 
a  series  of  islands  appearing  above  the  waters. 
Following  the  pre-Cambrian  came  the  Cam- 


136     .  MINING  INVESTMENTS 

brian,  and  all  the  periods  of  the  Paleozoic  Age, 
during  which  the  first  forms  of  life  were  de- 
veloped and  land  in  greater  extent  appeared 
above  the  waters.  The  great  regions  of  north- 
ern United  States  and  lower  Canada,  the  Lake 
regions,  great  portions  of  the  Andes  and  Rocky 
mountains,  portions  of  the  mountains  of  Brazil, 
great  stretches  of  Asia,  and  large  areas  of  Cen- 
tral Europe  and  nearly  all  of  Africa  may  be 
referred  to  this  age.  In  similar  formations 
came  the  Mesozoic,  during  which  there  were 
mountains  intrusions  and  the  building  up  of 
landed  areas  around  those  all  ready  formed; 
largest  development  taking  place  in  Europe 
with  perhaps  the  completion  of  the  continent 
of  Africa  to  very  much  its  present  dimensions, 
for  Africa  is  an  old  country,  the  oldest  con- 
figuration and  the  least  altered  surface  which 
the  earth  has  developed. 

After  this  in  the  later  ages  of  the  Mesozoic 
came  the  beginning  of  the  vast  plain  and  table 
land  formations  of  America  and  Asia,  and  its 
termination  in  a  great  series  of  terrestrial  con- 
vulsions, and  the  'breaking  through  of  all  the 
great  ranges  of  the  Andes  and  Rocky  moun- 
tains forming  the  table  lands  of  America,  the 
mountains  of  Europe  and  probably  of  south- 
western Asia,  with  Africa  remaining  tranquil 
and  undisturbed.  Following  this  came  the 


AND  HOW  TO  JUDGE  THEM  137 

Cenozoic  development  of  the  basins  of  Europe 
between  the  mountain  systems  and  the  plains 
of  America,  Australia  and  Asia  adjacent  to  the 
lands,  which  had  appeared  in  the  section  of  the 
north.  Great  convulsions  were  developed  dur- 
ing this  era  and  many  volcanoes  appeared, 
some  of  them  continuing  even  to  our  day.  To 
this  era  belong  the  uplift  of  the  Pacific  coast 
ranges  of  the  United  States,  the  islands  of  the 
far  Pacific,  the  volcanic  formations  of  the  East 
Indies  and  Japan;  with  the  mightiest  move- 
ment in  the  uplift  of  Central  Asia  and  the 
Hymalaya  mountains  where  the  greatest  and 
perhaps  the  most  recent  mountain  systems  of 
the  world  lie  little  known,  and  as  yet  scarcely 
explored;  and  Africa  still  undisturbed  calm  in 
its  development,  the  surface  then  as  we  know 
it  now,  except  that  probably  the  great  desert 
wastes  were  fertile  lands,  for  at  that  time  the 
continent  had  perhaps  only  begun  to  show 
signs  of  drying  up  because  of  its  great  age. 

Then  in  the  Quarternary,  the  last  age  of  the 
Cenozoic  era  brought  the  formation  of  coastal 
plains,  the  savanna  lands,  the  selvas  of  the 
Amazon,  volcanic  islands  in  the  Pacific,  the 
European  low  coasted  regions,  the  pushing  out 
of  the  delta  of  the  Ganges,  and  all  the  borders 
of  the  open  lands  of  China;  and  with  the  cul- 
minating age  of  the  Cenozoic  came  the  era  of 


138  MINING  INVESTMENTS 

man,  and  soon  began  his  delving  after  minerals 
in  the  earth. 

In  the  older  countries  of  Caucasian  domina- 
tion the  mineral  deposits  are  well  explored, 
some  of  them,  notably,  the  tin  mines  of  Corn- 
wall, and  the  copper  mines  at  Rio  Tinto,  Spain, 
having  been  occupied  since  Roman  days;  and 
there  are  many,  such  as  the  coal  and  iron  mines 
of  England,  Germany  and  France;  as  well  as 
many  other  properties,  which  have  been  oper- 
ated for  long  periods,  and  are  monuments  of 
splendid  engineering  and  metallurgical  prac- 
tice. 

It  is  hardly  expected  that  in  Europe  discov- 
eries of  new  mineral  deposits  will  be  made,  for 
those  regions  have  been  very  completely  exam- 
ined; always  something  new  may  be  looked 
for,  but  the  speculative  possibilities  are  cer- 
tainly not  very  great.  A  short  time  ago,  how- 
ever, important  iron  and  coal  seams,  hereto- 
fore unknown,  were  discovered  in  England, 
and  promise  to  be  of  unusual  importance. 

Among  the  formations  as  developed  in 
Europe  we  find  the  Archean  mostly  unproduc- 
tive, excepting  only  in  Sweden  and  Norway, 
where  there  are  important  iron  deposits;  but 
many  of  these  are  re-deposited  formations, 
found  in  the  bottoms  of  the  lakes  where  iron 
has  collected  from  the  surounding  country.  In 


AND  HOW  TO  JUDGE  THEM  139 

the  Urals  there  are  mines,  of  which  the  plati- 
num deposits  are  famous,  and  various  gem 
stones,  with  some  gold  deposits  which  attract 
attention.  Probably  in  the  Ural  regions  min- 
ing discoveries  may  result  in  the  development 
of  important  enterprises,  for  the  country  has 
been  little  developed. 

In  the  pre-Cambrian  regions  arid  among  the 
intrusive  older  mountains  of  Central  Europe, 
both  pre-Cambrian  and  Paleozoic,  there  are 
found  silver  and  rare  minerals  with  some  gem 
stones;  and  then  the  Mesozoic  with  the  coal 
and  iron  mines  of  England;  and  the  Cenozoic 
with  the  coal  and  iron  mines  of  Germany  and 
France,  and  the  great  basin  formations  contain- 
ing the  clays  and  earths  on  which  so  many 
European  industries  are  founded.  These  basins 
have  been  pretty  thoroughly  explored,  ex- 
cepting only  the  great  Russian  basin  be- 
tween the  mountains  of  Central  Europe  and 
the  Ural  regions;  and  under  this  basin  expec- 
tations are  entertained,  by  some,  that  great 
deposits  of  coal,  iron  and  petroleum  will  be 
found.  In  Spain  there  is  the  fragment  of  the 
Archean  and  eastward  along  southern  Europe 
is  the  Mediterranean  basin  with  its  volcanic 
formations  and  few  mineral  deposits.  Europe 
is  not  a  place  of  great  mineral  enrichment ;  and 
perhaps  the  great  mysterious  continent  of  Asia 


140  MINING  INVESTMENTS 

may  also  be  found  but  poorly  endowed  com- 
pared to  other  regions  of  the  earth.  Yet  the 
wealth  of  Asia  is  proverbial,  the  splendors  of 
her  rulers,  the  crushing  poverty  of  her  hoards 
of  population;  but  recent  investigation  has 
advanced  the  theory  that  the  accumulated 
wealth  is  not  so  much  that  the  mines  are  very 
rich,  but  that  many  hands  are  available  to 
gather  what  there  is.  However  this  may  be, 
Asia  presents  a  field  for  mining  enterprise  and 
speculation  to  which  eager  eyes  are  turned. 

Attention  has  been  attracted  to  the  gold 
mines  of  Siberia  among  the  Altai  mountains; 
mines  worked  by  bleeding  convict  hands,  and 
with  such  cheap  labor,  yielding  returns  which 
are  notable ;  yet  perhaps,  worked  under  another 
system  the  Siberian  gold  mines  would  not  yield 
so  great  a  profit.  Of  the  Paleozoic  and  Meso- 
zoic  regions  of  Asia  little  is  known,  and  among 
these  formations  where  the  intrusive  moun- 
tains have  broken  in  their  gradual  uplift,  es- 
pecially along  the  Hymalayan  regions  where 
both  Paleozoic  and  Mesozoic  formations  are 
found,  precious  stones,  and  precious  metals 
may  be  had;  and  rumor  has  it  that  in  the  lands 
over  toward  Thibet  there  are  many  gold  de- 
posits, and  in  these  regions,  and  in  the  moun- 
tains to  the  westward  through  Persia,  enter- 
prises and  speculations  may  develop,  and  the 


AND  HOW  TO  JUDGE  THEM  141 

regions  are  worth  watching.  Among  the  Ceno- 
zoic  plains  and  lands  and  the  rolling  hills  of 
China,  coal  and  iron  deposits  are  reported, 
copper  is  had,  and  here  elements  for  great 
speculations  are  at  hand,  and  the  opportunities 
for  entering  upon  them  are  often  discussed. 

Among  the  Cenozoic  mountains,  the  great 
uplift  of  the  Hymalayan,  which  have  in  com- 
paratively recent  times  broken  through  during 
a  steady  upheaval  among  the  older  formations, 
there  are  reports  of  mineral  deposits,  but  little 
is  known,  though,  as  previously  stated,  in  the 
Paleozoic  and  Mesozoic  regions  of  northern 
India  and  Indo  China,  over  toward  the  base  of 
the  Hymalayan,  mines  of  gold  and  precious 
stones  exist,  and  developments  may  follow 
which  will  result  in  a  wide  speculation. 

Of  the  older  continents  none  are,  perhaps, 
better  endowed  with  minerals  than  Africa, 
ancient  regions  where  the  surface  has  been 
so  little  disturbed  that  it  may  be  considered  the 
oldest  in  all  the  earth.  Here  perhaps  the  great- 
est developments  are  to  be  made,  greater,  it 
may  be,  than  those  which  have  been  in  oper- 
ation in  these  latter  years;  for  the  vast  in- 
terior of  Africa  is  scarcely  known,  and  reports 
come  that  every  mineral  is  there  to  be  found. 

From  among  the  outer  mountains  of  the 
north  reports  of  rich  deposits  come  at  times, 


142  MINING  INVESTMENTS 

and  also  from  the  great  interior  desert;  so 
ancient  that  it  has  dried  to  an  appalling  deso- 
lation. In  the  broken  country  further  south, 
after  passing  the  great  interior  jungled  plains 
are  other  regions  whence  come  the  stories  of 
mineral  wealth,  and  further  south  the  Rand, 
with  all  its  celebrated  mines,  commands  atten- 
tion; surely  Africa  presents  a  place  for  mining 
possibilities,  and  one  should  watch  for  oppor- 
tunities. 

Easterly  from  this  ancient  continent,  across 
the  Indian  Ocean,  are  all  the  island  regions, 
and  Australia;  recent  formations  in  most  in- 
stances, among  which,  at  places,  important 
mineral  interests  have  developed,  and  others 
are  expected. 

Australia  has  her  outer  fringe  of  mountains 
and  great  interior  plains  like  Africa,  but  not 
of  such  antiquity,  though  Paleozoic  forms  are 
found  and  crystalline  rocks  attest  older  places 
of  formation.  In  the  south  and  west  are  the 
gold  mines  which  have  attracted  the  attention 
of  the  civilized  world,  and  have  made  some 
magnificent  fortunes.  Coal  and  iron  deposits 
are  known,  the  coal  being  in  abundance  suf- 
ficient to  be  of  economic  importance,  and  the 
copper  mines  are  worthy  of  consideration;  the 
precious  stones  also  are  important,  and  have 
afforded  a  considerable  revenue.;  Here,  a  min- 


AND  HOW  TO  JUDGE  THEM  143 

ing  speculation  has  been  long  in  active  oper- 
ation, and  further  favorable  discoveries  may 
still  be  expected. 

North  and  eastward  from  Australia  are  all 
the  many  islands  of  the  Pacific.  In  most  in- 
stances the  formation  is  volcanic  and  the 
islands  may  be  generally  considered  of  recent 
origin,  that  is  recent  compared  to  Africa  and 
certain  portions  of  America.  Among  these 
islands  it  is  said  that  every  known  mineral  is 
to  be  found,  but  beyond  the  reports  we  have 
little  of  information,  and  the  places  are  so 
afflicted  with  savage  people,  and  the  dangers 
are  so  great,  that  probably  mineral  explora- 
tions will  be  much  retarded.  In  the  Philippine 
Islands  are  found  great  stretches  of  stratified 
conglomerates,  gravel  beds  turned  to  stone; 
extensive  lime  stone  formations;  lava  flows; 
older  crystalline,  and  schistose  rocks;  the  con- 
figuration indicating  places  of  recent  geological 
origin.  Reports  of  mineral  deposits  have  been 
circulated,  but  though  a  speculation  started  up 
at  one  time  not  long  ago,  apparently  it  has  died 
away  and  the  mineral  deposits  of  the  Philip- 
pines are  perhaps  not  so  important  as  had  been 
anticipated. 

Further  north  are  the  Islands  of  Japan,  vol- 
canic, mountainous  and  of  a  teeming  popula- 
tion. Here  there  are  minerals,  coal,  iron  and 


144  MINING  INVESTMENTS 

copper,  the  later  being  of  such  great  import- 
ance as  to  be  a  factor  in  the  world's  economy. 

Then  eastward,  and  to  the  north,  is  that 
great  mining  region  Alaska,  whence  for  years 
came  reports,  and  stories  of  golden  treasure 
accumulations,  which  scarcely  were  believed; 
till  suddenly  a  blaze  of  enthusiasm  followed  a 
greater  discovery,  and  to  that  far  country  in 
the  north  went  thousands,  and  money  poured 
in  and  gold  came  out.  A  region  of  ancient  for- 
mations and  volcanic  intrusions,  plains  well 
worn  down,  scoured  out  valleys  and  denuded 
hills;  with  gold  and  copper,  coal,  iron  and  all 
minerals  calling  for  exploitation;  and  probably 
in  Alaska  there  will  be  developments  to  en- 
rich, as  great  as  any  which  ever  have  been  iri 
all  the  world. 

Following  down  to  the  south,  a  great  range 
of  mountains  stretches  along  the  coast  where 
explorations  have  as  yet  not  been  of  great  ex- 
tent, and  where  mineral  deposits  may  be  found, 
which  will  be  of  great  importance ;  and  it  seems 
a  country  certainly  worth  watching,  for  here 
some  great  discoveries  are  anticipated.  The 
whole  Pacific  system  of  mountains  from  the 
northern  Arctic  to  the  Antarctic  regions  in  the 
south  is  mineral  bearing  so  far  as  it  has  been 
explored,  and  there  is  reason  to  believe  that 
this  but  little  explored  portion  of  the  range 


145 


will  be  mineralized  the  same  as  all  the  other 
and  better  known  sections. 

Eastward  of  these  little  explored  portions  of 
the  great  Pacific  ranges  are  all  the  Mesozoic 
and  Cenozoic  plains  of  Canada,  where  coal, 
iron  and  petroleum  deposits  are  expected;  and 
then  we  come  to  the  older  metamorphic  re- 
gions of  middle  Canada,  where  among  pre- 
Cambrian  rocks,  intrusive  gabbros  and  tric- 
linic  feldspar  formations  are  the  seams  of  silver 
bearing  ores,  copper  impregnations,  and  great 
accumulations  of  pyrite  ores  which  are  now 
attracting  a  wide  public  interest. 

North  and  westward  from  these  are  the  little 
known  Archean  regions  of  Labrador.  There 
mineral  discoveries  may  be  expected,  and  this 
is  a  region  well  worth  watching.  Southward 
along  the  coast  and  its  adjacent  country  we 
have  the  schistose,  the  mica  bearing,  the  gran- 
ite and  intrusive  rocks  of  ancient  periods;  ex- 
tending down  into  the  United  States  a  great 
reach  of  country  mineralized,  irregularly  how- 
ever, so  far  as  gold  and  precious  metals  com- 
mand attention;  but  the  iron,  coal  and  pe- 
troleum deposits  of  the  Paleozoic  are  perhaps 
here  the  greatest  in  the  world.  Southward  are 
other  coal  and  iron  regions  and  then  westward 
across  the  middle  country  with  its  hills  and 
prairies  are  regions  underlaid  with  coal  and 


146  MINING  INVESTMENTS 

petroleum  and  with  lead  and  zinc;  and  then 
come  Cenozoic  plains,  and  after  that  the  Rocky 
Mountain  regions ;  place  of  activity  and  mighty 
enterprises.  The  great  semi-desert  country 
with  its  intrusions  bearing  gold  formation,  the 
copper  mines  extending  in  a  great  range  along 
the  inner  mountains,  mineralized  at  intervals 
well  up  into  Canada  and  far  away  to  the  South 
into  Mexico.  Then  the  coast  mountains  and 
the  great  gold  and  mineral  bearing  regions 
among  the  slaty  schists  from  Washington 
down  through  Oregon  and  California  to  Mex- 
ico. Here  is  a  vast  mining  region,  and  in  all 
the  country  of  the  western  lands  new  discov- 
eries may  be  expected ;  and  all  that  vast  region 
is  worthy  of  careful  and  intelligent  watching. 
In  Mexico  where  the  mountain  ranges  comes 
together  there  is  a  veritable  treasure  land,  and 
here  mineral  developments  are  such  that  the 
country  is  worth  the  most  careful  and  serious 
attention;  in  fact  the  prospects  are  so  great 
that  no  mining  proposition  should  be  presented 
from  that  country  but  it  should  have  the  most 
careful  and  serious  attention.  All  through  the 
mountains  of  Mexico  there  are  deposits  of 
gold,  silver,  copper,  lead  and  every  kind  of  min- 
eral; the  great  plain  of  the  central  uplands, 
and  the  mountain  ranges  on  either  side,  in 
fact  wherever  a  broken  country  is  found  in 


AND  HOW  TO  JUDGE  THEM  147 

Mexico  there  mineral  is  to  be  expected.  The 
great  rock  formations  of  that  country  are  of  the 
Mesozoic  era  and  through  these  rocks  intrusive 
uplifts  have  taken  place  in  Cenozoic  times  and 
in  these  broken  regions  there  is  mineral,  equal 
to  the  mineralization  of  any  other  portion  of 
the  earth.  Southward  volcanic  regions  are 
reached,  principally  noted  for  gold  deposits, 
and  farther  south  are  all  the  volcanic  develop- 
ments of  Central  America,  a  place  where  min- 
eral deposits  are  so  rich  that  the  attention  of 
the  civilized  world  has  been  attracted.  Here 
is  a  great  mining  country,  where  difficulties  al- 
most unsurmounted  beset  the  miner,  where, 
however,  some  notable  successes  have  been 
made,  but  it  is  in  many  instances  a  waiting 
game,  one  which  in  the  end  will  give  sure  win- 
nings; waiting  now  for  those  who  take  inter- 
ests in  cheap  stocks  of  companies  owning  great 
and  valuable  mines,  but  situated  where  con- 
ditions are  adverse  for  operations,  and  develop- 
ment must  be  slow,  and  patience  is  required. 
South  of  Central  America  and  the  Isthmus  the 
great,  little  explored  continent  of  South  Amer- 
ica is  filled  with  mineral  regions.  Conditions 
are  similar  to  those  in  Central  America;  mines 
rich  in  such  wealth  as  is  hidden  in  but  few  por- 
tions of  the  earth.  All  the  great  ranges  of  the 
Andes  are  mineralized  from  the  gold  fields  of 


148  MINING  INVESTMENTS 

northern  Colombia,  where,  in  the  low  laying 
placer  deposits  in  the  rivers  and  in  the  veins 
among  the  mountains  there  are  such  great  ac- 
cumulations of  gold  that  it  is  difficult  to  de- 
scribe the  treasure.  An  old  miner  visiting 
those  regions  said  on  returning,  "The  whole 
country  is  just  louzy  with  gold."  And  this  well 
describes  the  accumulations.  Southward  along 
the  Andes  are  the  gold,  silver  and  copper  mines 
of  Peru,  the  vast  mineral  deposit  of  Chili, 
where  copper  is  in  almost  every  mountain ;  and 
east  of  Chili  the  fabulous  wealth  of  Bolivia, 
where  among  the  older  Paleozoic  formations 
and  the  adjacent  regions  every  known  mineral 
may  apparently  be  had,  and  gold,  silver,  tin  and 
copper  are  of  such  abundance  that  almost  the 
whole  country  lives  from  the  product  of  the 
mines. 

Along  the  eastern  exposure  of  the  Andes, 
occupying  Mesozoic  bordering  on  Cenozoic  re- 
gions from  Colombia  southward,  there  is  a 
little  known,  scarcely  explored  territory  of  vast 
extent  where  rumors  of  mineral  wealth  un- 
known reaches  from  time  to  time  the  outer 
world ;  but  on  one  side  deep  forests,  and  on  the 
other  towering  mountains  block  the  way  to  a 
country  where  there  are  indications  that  ore 
deposits  as  rich  as  any  in  the  more  accessible 
portions  of  this  great  range  of  mountains  will 


AND  HOW  TO  JUDGE  THEM  149 

be  discovered.  This  range  of  lofty  mountains 
with  its  intrusive  masses,  towering  volcanoes 
and  exposures  of  older  sedimentary  rocks,  both 
the  eastern  and  western  slopes,  and  in  fact  all 
the  Andean  ranges  occupy  a  country  which 
should  be  watched  and  mining  propositions 
from  those  regions  should  receive  careful  con- 
sideration; even  the  little  known  territory  of 
Patagonia  is  worthy  of  attention,  and  some  re- 
ports of  truly  remarkable  mineral  deposits 
have  come  from  that  far  off  and  litte  explored 
country.  The  plains  of  Argentine,  and  of  the 
selvas  of  the  Amazon  offer  little  prospect  for 
mineral,  though  coal  and  petroleum  may  be  im- 
portant, for  there  are  indications  worth  ex- 
ploring which  are  frequently  reported,  especi- 
p'oring  which  are  frequently  reported,  especi- 
ally in  those  portions  of  the  plains  and  selvas 
nearer  the  Andean  ranges. 

In  the  great  uplands  of  Brazil,  of  ancient 
formation,  are  the  well-known  diamond  de- 
posits with  gold  and  rare  minerals,  offering 
an  attractive  field  for  exploration,  and  ac- 
quisition. These  mountains  are  broken  by  in- 
trusions of  more  recent  development  and  often 
mineral  bearing,  but  are  most  celebrated 
for  their  diamond  deposits.  North  of  these 
mountains  come  all  the  swamps  of  the 
Amazon,  a  vast  stretch  of  country  where  no 
mining  interests  can  be  expected,  but  further 


150  MINING  INVESTMENTS 

north  and  bordering,  one  side  on  the  swamp 
country  and  the  other  side  on  the  Caribbean 
Sea,  is  a  vast  region  of  ancient  mountains,  in 
the  Guiana,  Venezuela  and  eastern  Colombia; 
here  among  the  ancient  schists  there  are  gold 
deposits,  and  in  the  gravels  accumulated  from 
them  are  placer  mines,  which  have  become 
celebrated.  In  these  regions  every  mineral 
may  be  expected  and  there  is  good  reason  why 
one  should  keep  watch  of  discoveries  and  offer- 
ings made  from  this  section.  Accessible  it  is, 
but  there  are  many  difficulties  and  slow  de- 
velopment must  be  expected,  especially  in 
Venezuela  where  till  the  political  conditions 
improve  it  is  hardly  safe  even  to  own  property. 
In  Colombia  the  conditions  are  very  different, 
and  the  universal  testimony  of  those  who  own 
property  in  that  country  is  that  titles  are  safe, 
and  property  is  protected  even  during  revo- 
lutions; hence  from  Colombia  one  can  watch 
with  special  interest  for  reports  of  mineral  dis- 
coveries, and  anything  from  that  country  in 
the  form  of  mining  propositions  deserves  care- 
ful consideration. 

The  Caribbean  regions,  the  West  India 
Islands,  north  of  South  America  are  mostly 
but  poor  in  mineral  deposits,  though  in  Cuba 
there  are  some  great  mines;  but  also  many 
smaller  deposits  which  may  be  the  cause  of 


AND  HOW  TO  JUDGE  THEM  151 

serious  loss;  yet  Cuba  presents  some  very  at- 
tractive propositions,  and  offerings  from  that 
country  should  be  investigated.  Reports  say 
that  Hayti  and  the  Dominican  Republic  are 
rich  in  minerals;  these  Republics  are  of  appar- 
ently of  the  same  formation  as  Cuba,  intrusion 
hills,  limestone  accumulations  and  clay  plains, 
with,  it  is  reported,  mineral  developments 
among  the  mountains. 

In  this  chapter  the  principal  mining  regions 
of  the  world  have  been  given  in  brief  outline, 
and  among  some  of  them  indications  are  such 
that  reports  of  mineral  discoveries  should  be 
watched;  but  a' wise  investor,  knowing  how 
great  an  opportunity  may  be  had  through  in- 
vesting in  a  mine,  will  investigate  every  propo- 
sition which  may  be  presented  to  him  from 
whatever  region;  and  if  he  investigates  with 
proper  care  he  will  in  time  obtain  some  ac- 
quisitions which  will  compensate  for  all  the 
labor  expended  on  the  many  propositions  from 
all  parts  of  the  world  which  he  must  study  and 
reject  in  order  to  obtain  one  good  mining  in- 
vestment. 


XVI 

The  Mining  Regions  of  the  United  States 

An  investor  in  mining  stocks,  an  intelligent 
investor  who  studies  a  proposition,  and  has  an 
established  system  by  which  he  weighs  the 
merits  of  the  opportunities  presented  to  him, 
may  surely  consider  all  the  mining  regions  of 
the  world,  for  with  honest  men  in  the  manage- 
ment one's  money  can  be  sent  anywhere,  pro- 
vided the  inducement  is  good  enough.  To  the 
majority  of  people  the  propositions  offered 
from  one's  own  country  naturally  seem  the 
most  desirable.  To  us  mining  in  the  United 
States  is  the  most  attractive,  and  money  is  sent 
abroad  with  some  reluctance ;  yet  we  know  that 
our  country  is  well  explored,  and  that  great 
discoveries  are  more  probable  in  distant  places 
than  they  are  at  home.  However  that  may  be, 
our  own  country  is  one  of  those  best  endowed 
with  minerals,  and  many  important  develop- 
ments are  certain  to  animate  our  future,  in 
which  those  who  participate  will  reap  a  rich 
reward;  that  is  those  who  participate  intelli- 
gently, and  investigate  before  they  take  the 

153 


154  MINING  INVESTMENTS 

risk;  not  everybody  who  chances  a  venture 
without  investigating  may  expect  a  reward. 
Certainly  where  such  expectations  are  enter- 
tained a  review  of  our  mineral  regions  should 
be  of  interest.  The  United  States  produces 
every  known  mineral  used  in  the  arts  or 
industries,  some  in  but  an  inferior  volume, 
yet  every  known  useful  mineral  is  found; 
and  the  wealth  of  our  mines  runs  into  the  bil- 
lions, and  millions  of  people  are  participating 
in  them,  some  only  as  wage  earners,  but  all  are 
participating;  and  so  great  are  our  mineral  re- 
sources that  it  may  be  said  that  every  life  in 
the  United  States  is  to  some  extent  influenced 
and  benefited  by,  if  not  directly  dependent  on, 
our  mining  industries. 

Mineral  developments  are  found  from  one 
end  of  our  country  to  the  other.  In  the 
Archean  formations  of  New  England  among 
the  rough  hills  and  ridges  of  Maine,  New 
Hampshire  and  Vermont,  there  are  seams 
among  the  rocks,  at  places,  carrying  lead  sul- 
phides with  silver;  and  iron  with  sometimes 
copper  sulphides  carrying  gold.  These  de- 
posits have  not  been  prolific,  are  generally  of 
irregular  formation  and  are  probably  not  per- 
manent. Some  mines  may  be  discovered 
which  will  be  profitable,  but  the  region  is  not 
one  to  encourage  expectations.  From  this  re- 


AND  HOW  TO  JUDGE  THEM  155 

gion   down   through    Central    New   England, 
through  New  York  and  Northern  New  Jersey, 
we  have  a  composite  country  where  there  are 
Paleozoic  formations;  metamorphic  or  altered 
rocks,  in  which  the  character  has  become  com- 
pletely   changed;    intrusive    dykes    of    dark 
igneous  rocks,  some  of  them  of  great  width, 
others  only  narrow  cracks  through  which  the 
heated  material  has  come  to  the  surface  and 
cooled  to  form  a  narrow  dyke  of  dark  colored 
rock;  and  there  are  areas  of  Archean  rocks. 
Among    these    formations    the    characteristic 
mineral  is  iron,  and  some  very  great  mines 
have    been    developed.     Near    some    of    the 
igneous  intrusions  there  are  copper  deposits 
which    have    attracted   attention.      Lead    sul- 
phides  are    found   at   places,    graphite    exists 
among  the  metamorphic  rocks,  but  is  valuable 
only  at  one  or  two  localities  in  northeastern 
New  York.    It  is  the  iron  which  is  of  principal 
importance  in  this  formation.     The  mines  at 
Sterling  Furnace,  New  Jersey,  producing  iron, 
manganese  and  zinc  have  had  an  enviable  rec- 
ord since  Revolutionary  days.     In  New  York 
there  are  some  important  mines  latterly  eclipsed 
to  a  great  extent  by  the  vast  deposits  of  Michi- 
gan.   In  the  Adirondack  mountains  there  are 
enormous  deposits  of  iron,  but  these  deposits 
contain  a  high  percentage  of  titanium  and  are 


156  MINING  INVESTMENTS 

not  available  in  modern  furnace  practice. 
Titaniferous  iron  ores  can  be  smelted,  but 
it  costs  too  much,  hence  these  enormous  iron 
deposits  are  not  worked;  but  they  present 
great  possibilities,  and  should  be  watched  by 
investors  in  mining  stocks,  because  some  day 
they  will  be  used  and  perhaps  produce  great 
fortunes. 

In  western  and  central  New  York  the  Paleo- 
zoic formations  are  extensive  and  but  little  dis- 
turbed. Here  minor  products,  gypsum,  talc 
and  salt  in  great  abundance,  are  produced. 
The  salt  mines  are  of  decided  importance,  but 
there  are  small  chances  for  successful  specu- 
lations in  new  salt  mines,  the  present  output 
being  more  than  adequate.  To  the  south  of 
New  York  we  have  all  the  Paleozoic  regions 
of  Pennsylvania  containing  a  wealth  of  min- 
eral deposit,  the  like  of  which  the  world  has 
not  in  any  other  region.  Here  the  coal  and 
iron  deposits  represent  a  wealth  equal  to  that 
of  an  empire.  Other  minerals  are  found,  lead, 
zinc  and  copper;  but  these  are  overshadowed 
by  the  mightiness  of  the  coal  and  iron.  Pe- 
troleum has  been  and  still  is,  a  product  of  the 
highest  value  in  Pennsylvania,  and  great 
wealth  is  annually  produced.  This  is  an  old 
mining  region,  and  expectations  that*  discover- 
ies will  be  made,  in  which  one  can  participate 


AND  HOW  TO  JUDGE  THEM  157 

at  a  low  rate  during  the  first  stages  of  develop- 
ment, are  hardly  to  be  encouraged.  Mining 
investments  in  Pennsylvania  are,  however,  on 
a  sure  foundation,  and  represent  stability  in 
which  one  might  well  seek  to  participate. 
Southward  from  Pennsylvania  extensions  of 
the  Appalachian  Mountains  continue  in  a  splen- 
did series  through  Maryland,  Virginia,  West 
Virginia,  Kentucky,  Tennessee,  Western  North 
Carolina,  Northern  Georgia  and  Northern  Ala- 
bama. A  splendid  region  where  at  intervals 
mineral  formations  of  great  importance  occupy 
extensive  areas.  These  mineral  developments 
are  notably  coal  and  iron,  the  latter  occuring 
in  deposits  of  great  importance  in  the  southern 
portions  of  this  region,  especially  in  Alabama. 
Other  areas  are  also  of  importance,  particularly 
in  Tennessee  and  West  Virginia.  Coal  is 
abundantly  developed  adjacent  to  the  iron  and 
the  region  presents  many  features  which  favor 
industrial  development;  and  coal  and  iron 
propositions  from  the  lower  Appalachian  re- 
gions deserve  careful  attention.  Other  min- 
erals and  products  are  also  important;  the  pe- 
troleum wells  of  West  Virginia,  the  copper 
mines  of  eastern  Tennessee  and  over  into  the 
adjacent  states,  the  gold  mines  of  Georgia,  and 
the  manganese  deposits  in  the  southern  outer 
portions  of  this  formation,  all  present  oppor- 


158  MINING  INVESTMENTS 

tunities  some  of  which  are  worthy  of  atten- 
tion; but  there  are  many  ore  developments  of 
these  minerals  which  have  been  disappointing, 
and  the  region  is  most  notable  as  a  place  where 
coal  and  iron  interests  command  and  should 
receive  special  attention. 

Easterly  and  south  of  all  this  region  are  the 
coastal  plains  of  the  Atlantic  and  Gulf  States, 
a  region  favored  in  agricultural  rather  than 
mineralogical  advantages;  however  the  clay 
deposits  are  of  more  than  passing  importance, 
and  the  phosphate  beds  of  the  southern  coast, 
and  in  Florida  are  of  great  value ;  hence  propo- 
sitions from  this  region  offering  participation 
in  clay  deposits,  or  phosphate  beds  may  be 
worth  looking  after. 

Westward  from  the  Appalachian,  and  the 
Paleozoic  formations  of  western  Pennsylvania, 
the  great  middle  country  opens  out,  Paleozoic 
and  Cenozoic  formations  predominating,  with 
also  regions  where  the  Mesozoic  or  middle  life 
era,  is  in  strong  development.  Here  we  have 
the  great  expanse  of  bituminous  coal  mines 
occupying  Ohio,  Indiana  and  Illinois;  and  in 
the  coal  country  or  adjacent  to  it  important 
petroleum  deposits  are  buried  deep  below  the 
coal  beds.  These  are  propositions  worthy  of 
investigation  and  if  a  new  enterprise  is  brought 
forward  it  should  receive  consideration. 


AND  HOW  TO  JUDGE  THEM  159 

Through  the  centre  of  this  vast  region  is  the 
Cenozoic  valley  of  the  Mississippi  where  min- 
eral developments  are  not  at  present  known, 
but  on  either  side  of  it  are  the  great  lead  and 
zinc  regions  of  Wisconsin,  Illinois,  Iowa,  Mis- 
souri and  Arkansas,  a  great  stretch  of  coun- 
try where  some  most  excellent  results  are  be- 
ing obtained.  In  fact,  so  satisfactory  are  the 
profits  from  these  lead  and  zinc  mines  that 
rarely  are  general  investors  asked  to  participate 
as  subscribers,  and  when  propositions  are 
offered  they  are  worthy  of  every  consideration, 
and  where  they  are  found  in  honest,  capable 
hands,  they  should  be  accepted.  Further  to 
the  west  in  this  great  interior  region  are 
the  oil  fields  extending  from  Kansas  south- 
ward to  the  plains  of  Texas;  deposits  of 
petroleum  which  have  made  some  great  for- 
tunes, and  many  most  unfortunate  losses,  pre- 
senting conditions  which  while  making  them 
worthy  of  consideration,  should  yet  be  looked 
upon  with  caution.  North  of  this  great  in- 
terior region  are  the  mineral  deposits  of  that 
wonderful  territory  occupying  a  zone  in  north- 
ern Michigan,  Wisconsin  and  Minnesota. 
Here  are  iron  deposits  great  in  extent  and  bear- 
ing accumulations  of  ore  not  excelled  in  all  the 
world;  and  in  one  restricted  area  in  Michigan 
are  the  most  famous  copper  mines.  So  cele- 


160  MINING  INVESTMENTS 

brated  has  this  region  become  that  many 
inferior  projects  have,  because  of  the  fame 
of  their  surroundings,  been  given  credence  and 
much  money  has  been  lost  in  mining  specula- 
tions; for  which  reason  propositions  from  this 
country  should  be  carefully  weighed  and 
accepted  only  on  ample  proof  of  merit. 

Westward  of  all  the  great  interior  country 
in  mighty  ranges  are  the  Rocky  Mountains  re- 
gions of  speculation,  resulting  in  both  fortunes 
and  most  unhappy  losses ;  whence  always  there 
are  propositions  sending  out  appealing  calls 
for  help.  The  capitalization  of  the  Rocky 
Mountains  mines  is  estimated  in  the  billions, 
and  the  region  is  so  rich  that  the  capitalization 
may  not  be  excessive.  Numerous  mining 
camps  and  even  great  cities  have  been  built  up 
on  the  products  of  these  ore  deposits,  and 
every  mineral  of  economic  importance  is  to  be 
found  among  the  Rocky  Mountains.  Of  the 
mining  regions  there  are  the  Black  Hills  ad- 
jacent to  the  Rockies,  where  gold  deposits  are 
famous,  and  tin  mines  have  attracted  attention ; 
there  are  the  great  copper  and  silver  mines  of 
Montana  at  Butte  and  the  silver  lead  ores  of 
Wyoming  at  Coeur  d'  Alene,  and  adjacent  re- 
gions. In  Utah  and  Colorado  a  great  belt  of 
silver  lead  ores  is  located  in  the  carboniferous 
lime  stones,  and  found  at  intervals  forming 


AND  HOW  TO  JUDGE  THEM  161 

important  mining  regions.  Occupying  the 
interior  of  Colorado  among  intrusive  dykes 
and  ledges,  are  wonderful  gold  mines  in 
splendid  series,  from  which  millions  have  been 
and  are  being  taken.  In  the  southern  regions 
there  is  the  great  copper  belt  across  Arizona 
and  New  Mexico,  a  splendid  mining  country 
rich  in  gold,  silver  and  numerous  minerals  as 
well  as  in  its  wealth  of  copper.  Surely  a  won- 
derful mining  region  is  presented  in  the  Rocky 
Mountain  ranges,  a  place  where  fortunes  can 
be  made  and  lost,  and  speculation  will  always 
be  in  evidence.  So  great  a  region  as  this 
should  receive  a  very  careful  study,  but  propo- 
sitions must  be  accepted  with  care,  the  wealth 
is  at  hand,  but  there  are  many  dangers  and  un- 
certainties. 

Westward  still  further  is  the  basin  region  of 
the  United  States,  a  series  of  low  plains  and 
mountain  ridges  where  in  these  days  great  dis- 
coveries of  mineral  bearing  ridges  have  been 
made,  and  hundreds  of  enterprises  are  offering 
their  attractions,  particularly  in  the  Western 
portion  of  Nevada  over  against  the  Sierra 
Nevada  mountains.  Here  a  great  mineralized 
reach  of  country  has  been,  and  is  being  opened, 
and  some  splendid  fortunes  have  been  made. 
These  mines  of  Nevada  are  apparently  de- 
veloped through  the  influence  of  intrusive 


162  MINING  INVESTMENTS 

dykes,  and  probably  a  broader  influence  tend- 
ing to  ore  formation  will  be  found  to  have 
originated  with  the  uplifting  of  the  great 
ranges  of  adjacent  mountains.  It  is  probable 
that  the  mines  of  Nevada  are  deep  and  promi- 
nent, and  those  who  have  ownership  in  the 
greater  propositions  may  consider  themselves 
fortunate,  and  those  who  would  place  money 
in  mining  should  give  careful  attention  to  this 
great  region  where  gold  and  copper  are  in  such 
abundance;  but  to  pick  a  winner  from  among 
all  the  mass  of  offerings  will  require  skill,  and 
judgment  of  no  mean  order. 

Beyond  this  region  of  Nevada  and  the  great 
basin  lie  all  the  Pacific  mountain  ranges  where 
gold  predominates,  a  great  series  of  elevated 
ridges  from  the  northern  limits  of  our  country 
to  its  southern  boundary.  There  in  the  slaty 
metamorphic  formation,  dark  colored  rocks 
extending  down  into  the  earth  are  veins, 
ledges;  and,  developed  from  them  gravel  beds, 
rich  in  gold.  Here  the  greatest  mining  specula- 
tion the  world  has  ever  known  was  once  in 
operation,  and  the  millions  made  and  lost  in  a 
few  years  are  still  remembered;  and  even  now 
from  this  region  many  good  propositions  are 
presented  worthy  of  the  best  acceptance. 
Many  others  must  be  considered  worthless,  and 
the  Pacific  gold  mining  regions,  while  offering 


AND  HOW  TO  JUDGE  THEM  163 

some  most  attractive  opportunities,  is  also  a 
place  of  many  speculative  ventures;  not  in 
gold  only,  but  in  many  other  mining  propo- 
sitions, for  this  region  is  well  endowed  with 
all  minerals,  and  offerings  from  here  should 
be  carefully  scanned  and  care  taken,  extra 
care,  to  choose  the  winners. 

This  is  but  a  brief  outline  of  the  mineral  re- 
gions of  the  United  States,  but  enough  to  show 
that  this  land  of  ours  is  so  abundantly  en- 
dowed with  ore  deposits  that  the  products  of 
our  mines  represents  one  of  our  principal,  and 
perhaps  our  most  important,  national  resource ; 
and  in  this  wealth  a  careful  investor  should 
have  participation,  and  great  profit, 


XVII 

On  the  Trail  With  an  Honest,  Compared 

With  the  Work  of  a  Dishonest 

Prospector 

There  is  something  fascinating  in  the  search 
for  mines,  all  the  beautiful  open  country,  the 
mountains,  valleys,  splashing  streams,  the  arid 
lands,  even  the  burning  deserts  are  calling  to 
the  stalwart  that  they  come  and  find  the  hid- 
den treasures.  No  hunter  pursues  his  quest 
with  energy  greater  than  the  prospector,  no 
sport  is  equal  to  the  keen  enjoyment  of  a  cam- 
paign searching  through  little  explored  places 
for  mineral  treasures. 

A  good  prospector  is  a  man  not  only  well 
informed  as  to  mineral  developments,  but  one 
who  is  at  home  on  the  mountains,  in  the  for- 
ests, or  on  the  plains,  knowing  all  the  craft  of 
the  woodman;  and  if  our  sportsmen  from  the 
cities  wish  to  see  something  of  what  real  open 
air  life  is  they  should  go  for  one  or  two  cam- 
paigns, grub  staking  a  good  prospector,  and 
accompanying  him  to  the  field  look  for  some- 

165 


166  MINING  INVESTMENTS 

thing  worth  while,  and  give  up  for  a  time  kill- 
ing things  just  for  fun. 

The  trail  is  one  which  will  tax  the  stoutest, 
the  prospector  is  eager  and  the  way  is  in  the 
lonely  unfrequented  parts.  The  traveling  kit 
is  light  for  one  must  go  far  afield,  and  while  at 
first  discomfort  may  be  felt,  it  is  only  for  a  few 
days ;  and  presently  the  wander  lust  dominates 
the  soul,  strength  of  freedom  has  mounted  to 
one's  heart,  the  limbs  are  supple,  the  wind 
blows  in  one's  face  and  goes  romping  away 
among  the  trees,  over  the  rocks  or  across  the 
plains;  and  one  is  free  as  the  air,  and  always 
the  wanderer  is  spurred  by  expectations,  a 
hope  that  never  fails  to  excite  to  energy.  With 
the  early  morning  while  the  cool  is  yet  in  the 
air,  perhaps  before  the  sun  has  come,  the  pros- 
pector is  bestirring  himself.  His  simple  break- 
fast is  soon  prepared,  coffee,  and  pancakes, 
with  probably  some  game  if  he  is  in  a  fairly 
fertile  country;  for  in  little  frequented  places 
there  usually  is  game  of  some  kind.  Then  if 
the  prospector  has  a  good  grub  stake,  his  jacks, 
as  miners  call  their  donkeys,  are  packed  and 
the  day's  work  has  begun;  a  tramp  along  the 
mountain  sides  usually  near  the  base.  While 
so  occupied  the  prospector  keeps  watching  out 
for  float,  that  is  bits  of  rock,  containing  min- 
eral which  may  have  been  carried  down  the 


AND  HOW  TO  JUDGE  THEM  167 

mountain.  Frequently  he  stops  to  examine  the 
rocks,  or  scan  the  outlines  of  the  country.  The 
water  courses  are  examined  because  the  gravel 
might  contain  pebbles  from  an  ore  deposit,  and 
this  would  indicate  that  somewhere  up-stream 
the  water  had  cut  through  a  mineral  bearing 
formation.  The  prospector  has  little  to  say, 
there  is  too  much  for  the  eyes  to  consider  and 
the  tongue  may  not  be  loosed.  The  companion 
must  learn  to  observe,  commune  with  the 
spirit  of  the  wild  country  and  be  content. 
While  prospecting  one  is  on  the  lookout  for 
game,  and  it  will  be  a  poor  morning's  work  in 
any  but  the  bad  lands,  or  barren  countries, 
which  does  not  give  something  for  one's  din- 
ner. The  dependence  on  game  becomes  a  sort 
of  natural  condition,  or  perhaps  the  instincts 
of  former  lives  long  dormant  become  keen 
again;  and,  usually  when  noon  comes,  and  a 
convenient  place  is  found  camp  is  made,  a 
supply  of  game  is  ready  to  be  cooked.  Here 
it  is  a  feast,  the  searching  is  forgotten  for  a 
time,  and  stories  and  good  fellowship  are  com- 
bined with  rest  and  plenty,  and  it  is  good  to 
be  alive.  Then  the  long  march  is  resumed, 
tramping  on  and  poking  about,  and  so  all  the 
'day  is  probably  passed.  At  night  a  place  to 
stop  is  prepared,  the  jacks  are  tethered  and 
soon  the  prospectors  are  asleep,  often  with  no 


168  MINING  INVESTMENTS 

covering  but  a  stout  blanket  and  the  distant 
vault  of  night.  Such  sleep  comes  only  in  the 
open  after  a  day  of  vigorous  effort,  one  will 
remember  always,  and  long  years  after  will 
want  to  go  again.  And  so  the  wandering  on 
continues;  sometimes  the  way  is  comforatble, 
and  pleasant,  the  surroundings  a  delight,  the 
life  a  happy  exploration ;  at  others  the  way  be- 
comes rough  and  hard,  perhaps  even  perilous; 
and  sometimes  wandering  in  arid  countries  the 
way  is  lost,  and  suffering,  real  suffering,  beset 
the  way;  it  may  be  that  after  hardships  one 
comes  out  safely,  but  perhaps  it  is  not  so,  and 
suffering  continues  into  agony,  and  all  is  ended 
in  a  little  while,  and  presently  another  human 
skeleton  is  bleaching  in  the  sun.  Such  dis- 
asters are  rare,  and  fortunately  most  prospect- 
ing trips  are  outings  of  real  pleasure,  a  life  of 
open  air  and  sunshine,  while  the  travelers 
search  and  search  and  sometimes  find  a  great 
reward.  For  days  the  traveling  on  continues, 
and  then  signs  of  mineral  are  encountered  and 
the  way  becomes  exciting,  dreams  of  wealth 
come  unbidden,  for  the  indications  are  sug- 
gestive of  a  treasure  located  somewhere  near. 
Now  a  camp  is  made  more  carefully,  the  out- 
look is  sufficiently  favorable  to  warrant  that 
some  days  should  be  passed  in  the  vicinity.  A 
careful  search  is  commenced,  the  prospectors 


AND  HOW  TO  JUDGE  THEM  169 

working  up  the  mountain  sides,  following  the 
streams  and  hunting  about  among  exposed 
ridges.  An  honest  prospector  does  his  work 
thoroughly,  and  leaves  no  spot  unexamined; 
but  a  dishonest  man  will  take  some  of  the  float 
which  may  carry  mineral,  stake  out  some 
claims  and  with  exaggerated  reports  seek  the 
cities,  or  return  to  those  who  had  sent  him 
with  stories  of  a  great  discovery;  and,  obtain- 
ing money,  will  live  at  his  ease  for  a  time,  and 
then  go  back  to  his  "great  discovery,"  collect 
some  float  together,  open  a  shaft  at  some  con-, 
venient  point,  and  then  send  reports  of 
progress;  perhaps  even  a  company  may  be  or- 
ganized, and  presently  there  is  another  mining 
enterprise  in  which  investors  who  are  too  lazy 
to  investigate  for  themselves  have  lost  some 
money. 

The  honest  prospector  is  not  content  with 
signs  of  mineral,  his  work  is  earnest,  and  in- 
telligent, and  by  following  up  the  signs  he, 
after  some  days  of  labor,  comes  on  the  ore  de- 
posit, the  place  from  which  the  broken  float 
had  been  eroded,  and,  mingling  with  other  ma- 
terial had  washed  down  the  mountain  side. 
Probably  it  is  not  important  because  most  ore 
deposits  are  not  important,  but  after  taking 
specimens  the  dishonest  prospector  would 
make  a  location  and  go  back  with  stories  of 


170  MINING  INVESTMENTS 

untold  wealth;  and  there  are  many  dishonest 
prospectors,  though  perhaps  most  of  them  are 
only  foolish.  It  is  evident  that  a  mineral 
country  has  been  reached,  and  the  permanent 
camp  where  the  first  signs  were  found  being 
comfortable  and  convenient,  it  is  made  a  base 
of  operations.  With  lighter  equipment  the 
prospector  now  visits  in  rapid  succession  the 
different  surrounding  points  which  may  prom- 
ise to  hide  mineral  deposits.  It  is  a  game  of 
search,  continued  search,  with  always  the  hope 
of  a  great  prize  which  may  be  waiting,  and 
there  is  excitement  for,  as  the  work  continues, 
other  little  deposits  of  ore  are  found;  if  it 
were  not  a  mineralized  country  these  would 
not  be  encountered,  there  must  at  some  adja- 
cent place  be  a  greater  deposit ;  and  so  for  days 
the  search  may  be  continued,  often  disappoint- 
ment after  hardship  is  the  only  reward  for 
one's  efforts;  perhaps  the  supplies  are  not  suf- 
ficient and  the  honest  prospector  must  go  back 
to  his  principals  or  partners,  and  say  that  he 
has  found  only  signs,  and  small  deposits  of 
mineral,  and  urge  that  more  money  be  given 
for  another  grub  stake  that  he  may  go  back 
again  and  continue  the  search.  Sometimes  the 
money  is  given,  but  more  frequently  it  is  re- 
fused, and  the  prospector,  setting  himself  to 
work,  probably  in  the  mines  and  holding  his 


AND  HOW  TO  JUDGE  THEM  171 

own  counsel,  will  save  and  save  till  a  stake  has 
been  accumulated,  and  he  is  ready  to  go  search- 
ing again  after  his  treasure.  Some  night  he  is 
off  secretly  that  he  may  not  be  followed,  be- 
cause some  prospectors  are  always  trying  to 
win  what  another  has  found;  those  who  are 
dishonest  do  this,  but  among  many  respect  is 
shown  to  those  who  have  done  the  work,  and 
the  prospecting  ground  is  left  undisturbed  be- 
cause the  mountains  are  very  broad,  and  there 
is  room  enough  for  all  to  search;  and  then 
every  prospector  has  a  theory,  and  fancies  that 
he  knows  some  place  where  fabulous  wealth 
is  just  about  to  be  discovered,  so  each  one 
seeks  his  favorite  haunts,  and  the  chances  are 
that  our  prospector  having  held  his  own  coun- 
sel will  find  the  place  where  he  was  working 
just  as  he  left  it.  Now  the  search  begins  again, 
old  locations  are  visited,  the  trend  of  the  min- 
eral formation  is  observed  and  following  these 
signs  one  day  the  prospector  does  come  across 
the  outcroppings  of  a  really  important  ore  de- 
posit, it  is  to  be  expected,  for  where  there  are 
numerous  small  deposits  a  greater  develop- 
ment is  probable.  Triumph  is  in  the  man's 
heart,  success  has  crowned  an  honest  effort, 
there  is  mineral  in  broad  exposure;  and  work- 
ing now  with  haste  and  eager  breathings  he 
traces  out  the  mine  which  he  has  found;  his 


172  MINING  INVESTMENTS 

mine,  it  seems  almost  as  if  it  were  his  child; 
henceforth  let  anyone  but  whisper  aught 
against  it  and  his  enmity  must  be  counted  as 
assured.  Yes,  the  mine  is  a  great  one,  the  lo- 
cations are  carefuly  made,  one,  or  even  ten  or 
more,  as  the  extent  of  the  discovery  may  war- 
rant; then  taking  samples  the  prospector  goes 
triumphant  to  the  nearest  city.  Anxious  mo- 
ments now  await  while  tests  and  assays  are 
being  made.  Yes,  the  results  are  favorable, 
the  mine  is  rich,  the  prospector's  fortune  has 
been  made.  Then  the  news  is  published,  the 
prospector  goes  back  to  work  his  claims,  prob- 
ably giving  a  just  share  to  his  former  partners 
with  whose  money  he  had  half  made  his  rich 
discovery.  While  so  engaged  others  come, 
and  soon  bands  of  men  are  searching  all  the 
hills  and  mountains,  perhaps  one  or  two  other 
great  mines  are  discovered;  but  to  a  certainty 
all  the  little  mineral  spots  and  minor  veins, 
which,  to  the  first  prospector  had  indicated  the 
great  deposit,  are  now  taken  up ;  and  presently 
a  score  or  more  of  mining  companies  are  offer- 
ing stock  in  prospects,  just  near  the  great  dis- 
covery. Always  the  claim  is  made  that  con- 
ditions are  to  improve  with  depth,  .but  the 
knowing  one  get  shares  in  the  main  ledges,  or 
stay  out  of  it,  if  the  shares  in  the  main  ledges 
are  too  high  in  price. 


XVIII 

The  Prospector  and  His  Agent.    Honest 
and  Dishonest  Work  Compared 

Will  he  secure  the  benefits  of  his  discovery? 
So  many  have  located  mines  and  then  lost  them 
through  dishonest  agents,  that  naturally  the 
prospector  is  suspicious.  Here  is  a  point  which 
one  can  consider  when*  a  mining  venture  is 
under  advisement:  If  the  agent  in  charge  of 
the  negotiations  is  a  man  who  has  the  confi- 
dence of  the  miners  and  prospectors  he  is 
pretty  certainly  a  man  who  can  be  trusted  by 
anybody. 

This  chapter  is  to  tell  not  so  much  of  the 
relations  of  investors  and  agents,  as  to  show 
how  all  the  losses  in  mining  do  not  fall  on  those 
who  supply  the  money  for  operations. 

The  mine  agent  or  broker  is  always 
scheming,  honestly  or  dishonestly;  he  has  a 
purpose  to  accomplish,  he  seeks  to  obtain  con- 
trol of  a  mine  which  has  been  discovered,  and 
so  manipulates  the  arrangements  for  incorpo- 
ration that  he  may  benefit  in  a  share  of  the 

173 


174  MINING  INVESTMENTS 

property,  and  at  the  same  time  put  it  in  a  po- 
sition from  which  capital  can  be  obtained  for 
its  operation.  When  this  is  honestly  done  any 
profit  which  the  agent  or  promoter  may  obtain 
is  well  deserved;  but  where  the  work  is  not 
fairly  rendered,  where  the  control  of  the  prop- 
erty is  secured  by  questionable  representation, 
and  promises  which  the  promoter  cannot  ful- 
fill, then  the  shares  obtained  are  illy  gotten; 
but  unfortunately  the  laws  are  such  that  it  is 
as  difficult  to  punish  such  transgressions  as  it 
is  to  obtain  judgment  against  one  who  has  sold 
and  misrepresented  shares.  In  some  instances 
a  clear  case  is  shown,  but  most  frequently  the 
undertakings  turn  out  to  be  only  that  due 
effort  should  be  made,  and  a  positive  engage- 
ment is  not  found;  and  by  due  effort  anything 
may  be  intended;  so  the  case  is  hard  to  reach, 
and  the  prospector  who  has  found  a  mine  must 
be  careful.  Unfortunately,  watchfulness,  in- 
telligently exercised,  is  as  rare  among  those 
who  have  found  mines,  as  caution  and  serious 
effort  at  investigation  is  rare  among  those  who 
invest  in  mining  shares,  and  the  promoters  are 
the  principal  causes  of  all  the  difficulties. 

Our  prospector  having  secured  his  papers, 
and  having  finished  enough  work  on  his  claims 
to  hold  them  for  a  year,  must  look  for  larger 
capital  to  put  them  on  a  strong  working  basis. 


AND  HOW  TO  JUDGE  THEM  175 

He  does  not  have  to  look  far  to  obtain  agents ; 
the  fame  of  his  discovery  has  gone  abroad  and 
he  is  fortunate  in  being  able  to  pick  and 
choose?  Having  found  a  satisfactory  man,  a 
clear  contract  is  drawn,  the  rights  of  the  pros- 
pector in  the  share  of  the  mine  which  he  will 
keep  for  himself,  the  share  he  will  allow  for 
the  capital,  and  the  percentage  he  is  willing 
to  pay  the  agent,  are  all  clearly  designated ;  the 
titles  are  then  deposited  to  protect  the  transac- 
tion, and  after  that  a  company  is  formed,  and 
generally  good  results  are  obtained,  not  only 
for  the  prospector,  but  for  those  who  purchase 
shares ;  and  under  careful  just  management  an- 
other is  added  to  the  long  list  of  brilliant  and 
successful  mining  enterprises. 

It  is  very  pleasant  to  find  such  instances,  but 
unfortunately  all  are  not  so,  and  many  a  pro- 
moter is  responsible  for  ruin  and  loss  where 
better  results  might  have  been  obtained.  Not 
all  prospectors  are  so  successful  as  to  find  a 
mine  which  is  great  enough  to  command  at- 
tention. There  are  many  properties,  and  min- 
eral deposits;  and  oftentimes  the  owners  must 
make  all  sacrifices  to  obtain  the  necessary 
funds,  but  there  is  such  doubt  attached  to  a 
prospector's  story  that  often  years  pass  before 
a  man  who  has  discovered  a  mine  can  obtain  a 
hearing,  and  naturally  the  mine  agent  can 


176  MINING  INVESTMENTS 

make  his  own  terms ;  if  only  he  will  render  the 
services,  he  can  have  the  mine  on  deferred 
payments,  that  is,  stake  the  mine  and  control 
it  for  purposes  of  organization  and  promotion, 
paying  himself  after  the  work  is  done. 

Usually  a  man  who  has  discovered  a  mine 
can  in  a  little  while  find  someone  to  undertake 
its  promotion,  and  then,  if  the  agent  is  not 
strictly  honest,  the  contracts  and  agreements 
are  so  drawn  that  the  owner  is  completely 
under  the  control  of  his  agent.  Usually  the 
first  step  is  to  make  an  agreement  stating  on 
what  terms  the  agent  may  control  the  prop- 
erty. Frequently  the  time  limit  is  made  as 
extended  as  the  mine  owner  will  allow,  and 
the  promoter  goes  to  work  or  perhaps  only 
appears  to  go  to  work  to  obtain  subscriptions 
for  the  proposition.  At  any  rate  the  expected 
contributions  to  the  working  fund  are  not  ob- 
tained, but  men  are  introduced  who  urge  that 
if  the  mine  were  put  in  a  company,  then  stock 
could  be  sold  and  money  obtained,  so  after  a 
time  a  company  is  formed  and  the  property  is 
transferred  to  it  for  shares,  some  of  the  shares 
are  voted  to  the  treasury,  and  a  goodly  pro- 
portion to  the  promoters,  who  now  take  more 
interest  in  the  property,  naturally  because  they 
own  a  large  share  in  it.  Some  money  is  ob- 
tained through  the  sale  of  shares,  most  of  it 


AND  HOW  TO  JUDGE  THEM  177 

going  to  the  promoters  who  sell  their  own 
stock — it  is  theirs,  what  law  can  prevent  them 
from  selling  it?  Some  money  is  used  on  the 
property,  enough  to  perhaps  demonstrate  to 
the  promoters  that  it  is  a  good  thing,  and  then 
the  whole  proposition  drags,  money  cannot  be 
raised;  the  prospector  must  live,  and  presently 
he  wants  to  sell  some  shares.  Impossible, 
there  is  no  market,  the  promoters  have  been 
unable  to  even  sell  the  treasury  stock.  To  re- 
mind them  of  their  promises  is  of  little  use, 
what  they  said  was  what  they  expected  to 
achieve,  but  for  one  reason  or  another  con- 
ditions have  not  been  favorable;  after  a  time 
when  the  situation  improves  they  will  be  able 
to  carry  out  the  arrangements;  but  the  pros- 
pector wants  money,  so  he  finally  sells  a  large 
block  of  his  shares  for  a  trifling  price,  and 
when  he  wants  more  money  sells  again;  and 
presently  all  his  stock  is  gone,  and  the  mine  he 
discovered  is  no  longer  his.  Then  he  goes 
back  to  the  mines  cursing  the  promoters, 
damning  corporations  and  swearing  that  stock- 
holders are  a  set  of  sharks  and  thieves;  but  it 
is  the  promoters  who  have  bought  his  shares 
for  almost  nothing,  and  now  that  they  own  all 
the  property,  or  rather  have  it  all  under  their 
control,  with  the  majority1  owned  by  them  and 
a  good  balance  of  stock  in  the  treasury,  they  go 


178  MINING  INVESTMENTS 

to  work  and  develop  the  property,  obtaining 
money  by  selling  the  shares;  and  most  likely 
let  the  property  fail  two  or  three  times,  and 
by  foreclosure  or  bankruptcy  proceedings  buy 
it  in,  and  sell  the  shares  of  reorganized  com- 
panies, repeating  the  operation,  till  finally  the 
mine  is  on  a  working  basis ;  and  they  have  ob- 
tained the  property  from  the  discoverer,  at 
forced  sale,  and  by  manipulation,  and  who  have 
obtained  money  from  several  sets  of  stock- 
holders to  bring  it  to  development,  reap  the 
benefit  of  their  conspiracies,  and  own  a  fully 
developed  mine. 

The  question  may  be  asked  why  does  the 
prospector  have  to  do  as  the  promoters  or 
agents  desire?  Why  does  he  not  sell  his  shares 
directly  to  the  investors?  He  cannot  do  so — 
investors  will  rarely  listen  to  the  man  who 
owns  the  property  and  buy  shares  of  him ;  and 
then  he  does  not  know  how  to  organize,  and 
naturally  he  seeks  the  promoter;  and  if  pro- 
moters who  may  not  be  honest  have  obtained 
a  hold  on  his  property  he  must  sell  through 
them  or  not  at  all,  for  who  would  buy  a  stock 
if  those  who  have  organized  the  company  ex- 
press doubts  and  rather  talk  against  the  propo- 
sition, and  criticise  the  discoverer.  Of  course, 
people  will  not  buy,  and  probably  it  is  well 
they  should  "not ;  for  a  set  of  promoters  who 


AND  HOW  TO  JUDGE  THEM  179 

scheme  to  freeze  out  the  discoverer,  will  later, 
if  the  property  turns  out  well,  scheme  to  freeze 
out  the  investors,  and  losses  will  result  to  both 
the  discoverer  and  those  who  may  invest. 


XIX 

The  Prospector,  the  Promoter,  the  Bank- 
er and  the  Investor.    Correct  and 
Dishonest  Work  Compared 

Three  against  one  is  not  a  fair  combination, 
yet  the  prospector,  the  promoter  and  the 
banker  are  frequently  an  adverse  combination 
against  the  investor  in  mining  stocks;  and 
when  the  combination  is  formed  for  dishonest 
purposes  the  investor  has  a  poorer  chance  be- 
cause usually  he  trusts  the  banker.  Probably 
the  bankers  are  more  to  blame  for  losses  in 
mining  than  are  any  other  people.  They  are 
to  blame,  it  is  claimed  by  some  people,  for  two 
reasons;  it  occasionally  happens  that  they 
enter  into  unlawful  combinations  with  the  pro- 
moters to  sell  questionable  shares  to  unsus- 
pecting investors;  and  the  other  reason  why 
the  bankers  frequently  cause  loss  is  that  they 
will  sneeringly  dismiss  the  subject  when  a 
client  asks  advice  in  reference  to  a  mining  ven- 
ture. The  banker  fails  to  obtain  for  himself 
participation  in  one  of  the  greatest,  if  not  the 

181 


182  MINING  INVESTMENTS 

greatest  of  our  industries,  and  leaves  his  client 
without  means  of  information,  and  an  easy 
prey  for  the  unscrupulous  promoter.  In  regard 
to  railway  stocks,  industrial  stocks,  municipal 
and  corporate  bonds  the  banker  is  well  in- 
formed and  seeks  constantly  to  obtain  infor- 
mation. In  regard  to  mining  he  is  densely 
ignorant,  nor  tries  to  better  his  information. 
The  banker  occupying  as  he  does  a  public 
position  neglects  his  duty  when  he  makes  no 
effort  to  serve  intelligently  such  of  the  clients 
of  his  house  who  may  become  interested  in 
mining  propositions.  He  does  them  a  double 
wrong  by  refusing  to  recognize  in  mining  a 
great  corporate  industry  because  he  retards 
their  participation  in  this  great  industry,  and 
by  intelligent  advice  he  could  make  advantage- 
ous investments  for  the  clients  of  his  house, 
where,  by  leaving  to  their  own  resources  those 
who  otherwise  would  seek  his  counsels,  the 
way  is  left  open  for  men  who  work  by  methods 
which  at  best  are  questionable. 

An  inquiry  as  to  how  bankers  frequently 
take  part  with  promoters  will  show  many  inci- 
dents of  interest,  and  in  some  respects  the 
bankers  in  the  great  financial  centers  are  as 
gullible  as  the  most  innocent  small  tradesmen 
of  a  provincial  town. 

The   promoter   knows   that   to   succeed   he 


AND  HOW  TO  JUDGE  THEM  183 

must  approach  each  victim  on  his  most  acces- 
sible side,  and  usually  in  dealing  with  a  bank- 
ing financial  house  he  begins  by  opening  an  ac- 
count for  speculation  in  listed  stocks.  It  may 
have  been  decided  between  the  prospectors  and 
promoters,  that  the  property  they  represent 
should  be  offered  in  the  great  financial  mar- 
kets; to  do  this  money  is  required,  and  fre- 
quently they  have  money,  and  after  laying 
their  plans  it  will  happen  some  morning  that 
a  well  appearing  gentlemanly  man  calls  at  a 
New  York  banking  house  to  make  inquiries 
in  regard  to  the  stock  market.  The  bankers 
are  there  for  that  purpose,  and  at  once  become 
interested  in  the  pleasant  stranger,  and  cor- 
dially invite  him  to  call  again.  Of  course,  he 
calls  again,  this  time  with  some  money,  and 
an  account  is  opened.  It  proves  a  good  ac- 
count because  the  new  client  is  there  to  seek 
favor  and  keeps  his  money  active,  taking  small 
profits  or  losses,  making  several  transactions 
a  day  and  becomes  a  regular  habitue  of  the 
place.  Naturally  the  talk  drifts  to  mining,  and 
presently  the  bankers  become  interested  in  his 
stories;  samples  are  shown,  and  the  next  thing 
a  mine  is  offered  through  their  house  backed 
by  one  of  their  best  customers,  a  shrewd  suc- 
cessful man  from  the  west.  Then  the  game 
begins;  the  prospector  and  others  who  have 


184  MINING  INVESTMENTS 

come  on  from  the  mining  country,  and  are 
introduced;  more  money  is  put  to  the  stock 
trading  account,  and  the  bankers  have  three 
or  four  active  customers,  who  are  in  and  out 
of  the  market,  usually  in  quick  turns,  making 
about  as  much  as  they  lose,  or,  if  losing,  the 
amounts  are  small,  and  the  accounts  can  be 
kept  active  for  a  long  time. 

With  such  reputable  backing  as  the  bankers 
have  given,  with  such  shrewd,  successful  men 
operating  the  proposition,  with  such  wonderful 
stories  as  are  now  circulated,  the  stock  of  the 
mining  company  this  group  of  men  represent 
begins  to  attract  attention.  The  bankers  buy 
some  shares,  many  of  their  clients  buy,  people 
in  the  open  market  buy,  the  stock  goes  up,  the 
greatest  bonanza  ever  known  has  come  out  of 
the  west,  there  is  a  scramble  for  shares,  an  ac- 
tive market  for  a  time;  the  papers  contain  re- 
ports and  interviews,  all  paid  for,  of  course. 
What  reporter  ever  wrote  who  would  not  make 
comments  for  a  reasonable  fee?  Then  comes  a 
time  when  the  miners  must  go  back  to  see  to 
the  operations  of  their  property.  For  a  while 
tlje  market  keeps  up,  then  begins  to  sag,  the 
bankers  send  for  information,  but  it  is  slow 
in  coming;  inquiries  are  sent  to  them  from  all 
about,  and  the  stock  goes  lower;  then  comes  a 
day  when  the  bankers  must  reluctantly  admit 


AND  HOW  TO  JUDGE  THEM  185 

that  where  they  had  taken  the  word  of  their 
pleasant,  active  customers,  they  find  on  in- 
vestigation that  the  grossest  exaggerations 
have  been  practiced  on  them,  and  they  must 
confess  that  they  have  been  taken  in.  Yet 
from  time  to  time  it  is  whispered  about  that 
not  all  bankers  are  taken  in,  some  retain  a 
share  of  the  plunder,  and  make  loud  invectives 
against  mining  in  general  and  the  proposition 
in  particular  which  lately  they  were  backing; 
and  when  the  discontent  and  criticism  has  sub- 
sided, they  presently,  that  is  some  of  them,  be- 
come interested  in  another  mine. 

Not  always  are  the  bankers  in  friendly  rela- 
tion for  profit  with  the  mining  promoters  of 
questionable  propositions;  frequently  they  are 
genuinely  stuck,  and  some  are  known  to  have 
refunded  all  the  money  which  had  been  placed 
in  a  worthless  enterprise  through  their  mis- 
guided influence.  It  has  been  said  that  the 
wealthy  brokerage  houses  doing  a  banking 
and  stock  business  are  the  most  easily  taken 
in  and  caught  by  an  exaggerated  mining  propo- 
sition, if  only  one  or  two  active  accounts  are 
first  introduced  to  make  easy  the  presentation 
of  the  scheme.  What  is  so  respectable  as  an 
active  account?  Of  course  the  mines  coming 
from  such  a  source  are  good;  and  the  banker 
densely  ignorant  of  mining,  though  it  is  one 


186  MINING  INVESTMENTS 

/ 

*>f  our  greatest  industries,  makes  of  himself 
an  easy  mark.  There  are  few  honest  mines 
offered  in  the  great  financial  centers,  the 
bankers  are  too  sneeringly  supercilious.  Min- 
ing? They  could  not  consider  it.  It  is  related 
that  a  man  with  an  honest  face  and  a  pocket 
full  of  specimens  stood  once  on  the  steps  of  a 
banking  house  and  said  under  his  breath: 
"Well,  I'll  be  damned."  He  had  a  good  propo- 
sition, one  worthy  of  investigation,  and  had 
come  east  to  find  someone  who  would  help 
him  float  it.  He  did  not  have  money  to  open  a 
fancy  account,  he  was  looking  for  someone  who 
would  take  an  hiterest  in  his  proposition,  and 
had  been  sneeringly  turned  down.  Such  had 
been  his  experience  in  a  good  many  places. 
Finally  he  got  in  with  some  outside  promoters 
and  they  floated  the  proposition.  The  papers, 
that  is  some  of  them,  published  attacks,  criti- 
cising those  who  had  taken  the  matter  up,  who, 
according  to  what  the  papers  said,  were  fit 
subjects  for  criticism.  Still  the  proposition 
grew,  and  found  favor;  and  presently  a  great 
mining  boom  had  developed.  Nevada  was 
brought  to  life  again,  treasure  had  been  found ; 
a  real  series  of  great  mines  had  been  dis- 
covered, a  business  running  into  hundreds  of 
millions  was  being  transacted;  but  among  the 
greater  bankers  and  brokers  not  the  percent- 


AND  HOW  TO  JUDGE  THEM  187 

age  represented  by  the  fraction  of  a  mill  was 
transacted,  the  whole  great  business  went  to 
others.  The  bankers  had  not  lived  up  to  their 
public  duty,  they  had  no  means  and  sought  no 
information  by  which  they  could  intelligently 
advise  in  regard  to  mining  propositions;  and 
there  being  no  established  places  in  which  one 
could  be  advised  any  proposition  could  be 
floated  on  the  tide  of  excitement,  resulting  in 
the  sale  of  questionable  shares  to  the  extent  of 
millions  of  dollars;  all,  or  the  greater  part  of 
which  at  least,  could  probably  have  been  saved 
had  the  bankers  done  the  duty  which  their 
public  positions  would  seem  to  require  of  them, 
and  had  taken  the  same  care  in  regard  to  min- 
ing stocks  which  they  take  in  regard  to  railway 
and  other  propositions. 

If  honest  work  were  done  the  different  trans- 
actions would  be  something  like  the  follow- 
ing. A  miner  or  prospector  visiting  a  promi- 
nent banking  house  with  a  proposition  would 
be  heard  and  his  claims  given  to  a  suitable  per- 
son, perhaps  an  employe  in  charge  of  the  min- 
ing interests,  who  would  investigate  and  find- 
ing the  proposition  questionable  would  so  re- 
port to  the  house,  but  finding  it  desirable  the 
business  would  probably  be  taken  up,  a  min- 
ing engineer  and  an  economic  geologist  would 
be  called;  and  if  they  found  it  favorable,  a 


188  MINING  INVESTMENTS 

banking  house  of  standing  would  presently  be 
"offering  a  desirable  mining  stock,  and  a  repu- 
table promoter  retained  by  them  would  be 
pushing  about  and  developing  a  market;  then 
it  would  be  that  the  prospector,  the  promoter 
and  the  banker  would  have  been  brought  to- 
gether on  a  proper  basis  to  serve  the  investor. 
If  such  ever  comes  to  be  an  established  cus- 
tom and  investors  will  seek  their  bankers  as 
the  proper  medium  through  which  to  obtain 
mining  stocks,  and  if  the  bankers,  not  unmind- 
ful of  their  public  duty  have  at  their  command 
real  advice  from  competent  engineers,  geolo- 
gists and  local  representatives  near  the  mines, 
a  sort  of  Utopian  condition  will  develop  in  min- 
ing; and  very  few  questionable  propositions 
will  be  able  to  get  through  the  offices  of 
watchful  banking  houses,  and  reach  the  public 
to  the  disadvantage  of  those  who  may  invest. 


XX 

The  Trials  of  a  Mining  Engineer  and 

the  Final  Success  or  Failure  of 

ail  Enterprise 

It  is  the  man  behind  the  gun  who  wins  the 
battle,  and  it  is  the  man  who  overcomes  the 
difficulties  of  operation  who  finally  makes  the 
mine  a  success. 

A  great  mine  owner  once  said:  "It  is  easier 
to  get  a  mine  than  a  man.  Give  me  a  man  and 
I  will  get  the  mine."  There  is  much  of  truth 
in  this  saying,  and  many  a  good  mine  has  been 
spoiled  by  poor  management. 

There  are  various  kinds  and  varieties  of  min- 
ing engineers ;  there  is  the  genuine  article  with 
suitable  credentials,  there  is  the  man  who  has 
taken  the  profession  up  and  sort  of  just  worked 
into  it,  and  there  is  the  mining  engineer  who 
does  his  mining  in  barrooms  and  hotel  corri- 
dors. These  latter  are  the  men  who  mostly 
get  up  schemes,  and  do  as  they  would  not  be 
done  by,  which  in  modern  slang  can  be  ex- 
.pressed  "Do  the  investors."  Loud  talking, 

189 


190  MINING  INVESTMENTS 

bragging,  swaggering — these  are  the  charac- 
teristics of  the  man  who  does  his  mining  in 
barrooms  and  hotel  corridors;  when  such  are 
met  avoid  them. 

Those  mining  engineers  who  have  taken  up 
the  business  and  just  sort  of  worked  into  it  are 
generally  known  by  their  contempt  for  techni- 
cal training,  and  their  boasting  approbation 
for  practical  mining.  When  dealing  with  such 
men  be  a  little  careful,  they  frequently  gradu- 
ate into  the  class  who  mine  in  barrooms;  but 
some  of  them  are  eminently  practical,  well  in- 
formed men,  whose  advice  and  guidance  are 
often  of  the  highest  merit  and  value.  In  min- 
ing there  is  no  school  which  can  turn  out  such 
valuable  men  as  the  "School  of  Hard  Experi- 
ence." Only  very  few  really  graduate,  because 
to  become  a  well  informed  mining  engineer, 
possessed  of  both  knowledge  and  experience, 
one  must  have  worked  under  varying  con- 
ditions, and  must  have  had  the  energy  and 
strength  to  have  spent  long  hours  at  study 
after  an  arduous  day's  work  had  been  done. 
There  are  such  mining  engineers ;  usually  they 
are  not  boastful,  but  their  services  are  invalu- 
able. The  trouble  with  most  mining  engineers 
who  hare  not  had  a  regular  course  of  technical 
training  is  that  they  have  not  done  the  study- 
ing to  obtain  the  information  which  an  engi- 


AND  HOW  TO  JUDGE  THEM  191 

neer  should  have,  and  as  a  consequence  their 
work  is  superficial.  A  man  who  faithfully 
studies  while  working  in  the  mines  can,  after 
about  twenty  years  of  effort^  observation  and 
study,  consider  himself  a  graduate  of  the 
"School  of  Hard  Experience,"  and  will  have 
obtained  all  which  the  college  boy  will  attain 
in  his  four  years  course,  and  a  great  deal  more 
besides  which  the  college  graduate  will  prob- 
ably never  attain;  and  often  the  graduate  in 
the  school  of  experience  may  justly  consider 
his  attainments  far  above  those  of  the  ordinary 
technically  trained  mining  engineer,  but  in  the 
"School  of  Hard  Experience"  there  are  very 
few  real  graduates. 

Then  we  have  the  regular  graduated  mining 
engineers,  all  of  them  exceptionally  well  in- 
formed men,  most  of  them  capable  of  in- 
telligently applying  what  they  know,  and  some 
few  of  them  combining  the  technical  training 
with  real  and  varied  experience;  such  men 
are  the  real  leaders  of  the  profession,  and  if 
any  investor  is  so  fortunate  as  to  know  such  a 
man,  let  him  be  wise,  and  keep  putting  money 
into  the  mining  propositions  his  friend  may  ad- 
vise, and  the  chances  are  he  will  become  rich. 

Besides  these  there  are  the  practical  miners, 
men  who  have  devoted  lives  to  work  in  the 
mines,  many  of  them  with  good  hard  sense, 


192  MINING  INVESTMENTS 

but  informed  in  too  limited  a  scale,  to  be  safe 
guides  in  relation  to  mining  investments ;  often 
they  make  the  most  excellent  mining  superin- 
tendants  and  managers,  but  just  as  often  they 
undertake  works  of  development,  and  follow 
flights  of  ambitious  fancy  into  realms  which 
they  do  not  understand ;  then  they  make  heavy 
losses,  and  bring  disaster  for  the  enterprise 
which  has  been  intrusted  to  them. 

When  a  mine  is  put  in  operation  some  one 
or  the  other  of  these  different  classes  of  mining 
engineers  is  probably  in  charge,  excepting  only 
the  engineers  who  do  their  mining  in  bar- 
rooms and  hotel  corridors.  Such  men  usually 
never  seen  a  mine,  or  if  they  do,  it  is  a  super- 
ficial examination  only,  a  visit,  an  outing, 
drinking  and  big  talk — a  grand  time;  but 
very  little  practical  consideration  of  the  mine. 

Let  us  suppose  that  a  mine  is  to  be  put  in 
operation,  and  that  the  engineer  with  a  party 
of  men  has  arrived,  and  is  preparing  to  do  the 
work.  A  rough  camp  has  been  built  by  people 
who  had  discovered  the  property ;  there  are  the 
outcroppings  or  exposures  of  the  mineral,  with 
some  pits  dug  into  them,  now  partially  filled 
with  rubbish  and  dirt;  the  surroundings  are 
rough  and  probably  not  very  attractive.  The 
door  of  the  camp  is  pushed  open  and  a  damp 
chill,  and  mouldy  odors  blow  in  one's  face,  a 


AND  HOW  TO  JUDGE  THEM  193 

rat  or  two  may  go  scuttling  away,  then  in  a 
moment  or  so  more  the  cabin  windows  are 
opened  to  let  in  some  light,  after  which  all  is 
bustle  and  disorder;  equipment  for  the  first 
operations  is  arriving,  and  quite  a  stirring 
about  takes  place  in  the  camp,  where,  perhaps 
for  some  months  everything  has  been  aban- 
doned. The  engineer  then  goes  to  look  at  the 
mine,  naturally  the  mine  is  first  in  his  thoughts, 
and  goes  to  have  a  look  at  it  while  the  men 
are  unloading  the  outfit.  When  he  has  had 
more  experience  he  won't  do  that,  the  mine 
will  stay  where  it  is,  and  he  had  better  keep 
check  on  his  supplies  and  see  that  instruments 
are  properly  handled.  But  there  is  the  fore- 
man. Yes,  but  as  a  matter  of  fact  there  is  no 
such  thing  as  a  foreman;  when  a  man  is 
capable  of  being  a  foreman  he  will  soon  pro- 
gress to  be  a  manager.  The  engineer  is  well 
pleased  with  the  appearances  of  the  property, 
certainly  it  looks  like  a  good  thing,  and  he 
spends  probably  an  hour  or  two  in  a  prelimin- 
ary examination.  Returning  to  the  camp  he 
finds  nothing  arranged  as  it  should  be,  the  men 
have  stupidly  piled  goods,  boxes  and  instru- 
ment cases  indiscriminately,  and  probably  a 
day,  perhaps  two  or  more,  will  be  required  to 
put  the  supplies  in  order ;  then  most  unreason- 
ably the  mule  drivers  pack  their  animals  off, 


194  MINING  INVESTMENTS 

and  will  not  wait  an  hour,  their  contract  was 
to  deliver  the  freight  at  the  camp;  there  it  is, 
give  them  their  money,  that  is  their  demand; 
and  counting  it,  they  are  off  down  the  trail. 

Arranging  the  supplies  will  take  some  time, 
but  the  engineer  can  start  the  survey  of  the 
property,  and  asks  for  the  case  containing  his 
compass  and  instruments;  a  man  with 
apologetic  consternation  in  his  face  brings  it 
with  word  that  some  of  the  things  got  jolted 
a  little,  but  he  guesses  not  much  hurt.  Not 
much  hurt!  Only  a  lens  broken,  the  sights 
on  the  compass  twisted  and  the  balance  thrown 
out  of  adjustment.  Well,  surveying  is  out  of 
the  question  for  the  present,  some  photographs 
can  be  taken.  More  apologies  from  the  men, 
it  rained  one  day  on  the  trail,  the  engineer  re- 
members that,  and  one  of  the  packs  got  wet, 
just  a  little  wet,  it  isn't  much,  and  the  camera 
outfit  happened  to  be  in  that  pack.  The 
men  bring  it,  but  no  use  talking  of  pictures,  the 
outfit  is  done  for.  Now  it  is  a  question  of  the 
man  behind  the  guns,  how  much  of  a  hero  com- 
bined with  a  genius  he  may  be.  Technical  in- 
formation will  not  help  him  much,  a  disorgan- 
ized, battered  outfit  is  placed  at  his  feet,  and 
there  is  a  mine  at  hand  which  he  is  to  examine, 
survey,  draw  up  the  plans  for  equipment  and 
open  to  the  best  advantage.  He  may  sit  down 


AND  HOW  TO  JUDGE  THEM  195 

and  write  to  his  principals  that  owing  to  diffi- 
culties on  the  trail,  carelessness  on  the  part 
of  the  freighters  and  pack  drivers,  serious  dam- 
age has  been  done  to  the  supplies,  and  work 
must  be  delayed  till  fresh  material  can  be  sent 
in.  He  will  have  to  write  of  the  loss,  and  I 
never  saw  an  expedition  start  out  into  the  field 
yet  which  did  not  meet  with  some  accidents; 
in  my  own  experience  I  have  learned  to 
pack  my  instruments  on  my  own  back,  or 
make  up  my  mind  that  I  must  do  without 
them,  and  in  that  case  it  is  just  as  cheap  to 
leave  them  at  home. 

Our  engineer  may  sit  down  and  wait  for  new 
supplies,  or  he  may  get  to  work  as  best  he 
can.  There  is  the  survey  to  be  made;  a  great 
pity  it  cannot  be  done  better,  but  the  property 
can  be  chained  off,  and  a  rough  survey  made 
which,  after  all,  does  fairly  well  answer  the 
purpose,  because  there  is  plenty  of  room,  and  if 
it  does  not  close  by  several  feet  the  error  can 
be  corrected  later.  The  outcroppings  can  be 
measured  and  estimated,  levels  can  be  taken 
with  rods,  and  by  hard  work  and  constant  ef- 
fort the  enterprise  can  be  driven  forward,  and 
presently  the  surface  work  is  done;  a  plumb 
line  and  rods  serving  in  place  of  the  broken 
lense ;  a  hand  compass,  or  perhaps  only  a  north 
and  south  line  made  from  the  stars,  taking  the 


196  MINING  INVESTMENTS 

place  of  the  surveyor's  compass;  with  this 
rough  equipment  and  careful  attention  to  de- 
tails, the  engineer  has  a  fairly  creditable  sur- 
vey made  with  tools  in  place  of  instrumens, 
and  before  new  supplies  could  reach  him  he 
is  ready  to  begin  work  opening  the  mine.  This 
work  begun  it  seems  as  though  some  accident 
were  always  happening.  In  comes  a  man  with 
a  bleeding  hand,  the  engineer  must  turn  physi- 
cian, and  fortunate,  indeed,  for  him,  if  he  has 
had  time  to  take  a  course  of  medicine,  if  only 
to  attend  a  few  lectures  and  to  have  learned  to 
bandage  cuts  and  set  bones,  because  it  is  as- 
tonishing the  number  of  accidents  which  will 
happen  among  a  company  of  men  at  work 
opening  a  mine. 

Day  after  day  the  work  is  pushed  on,  and 
it  seems  as  if  the  mining  engineer  must  be  in  a 
dozen  places  at  once;  tools  getting  broken, 
men  getting  hurt,  men  turning  sick,  the  cook 
threatening  to  leave,  the  workmen  shirking, 
and  a  hundred  other  things.  Nature  is  jeal- 
ous of  her  treasures,  and  the  number  of  coinci- 
dences, accidents,  and  impediments  which  can 
beset  a  new  mining  enterprise  seems  beyond 
calculation.  If  the  engineer  in  charge  is  a 
combination  of  hero  and  genius,  the  work  will 
be  pushed  steadily  on  to  triumphal  success, 
or  if  the  people  putting  up  the  money  realize 


AND  HOW  TO  JUDGE  THEM  197 

what  must  be  contended  with  and  overcome, 
and  are  willing  to  put  up  money,  and  put  up 
money,  and  then  put  up  more  money,  the  work 
will  be  done  after  a  time;  but  too  frequently 
those  who  sit  at  home  ask  of  their  engineer 
more  than  human  heroism,  energy  and  intelli- 
gence can  give;  and  with  all  the  trials,  priva- 
tions and  constantly  recurring  difficulties  to  be 
overcome,  unreasonable,  criticising  letters  from 
home  are  often  the  cause  of  a  sort  of  disorgani- 
zation in  the  effort,  a  demoralizing  influence 
which  brings  disaster.  But  where  the  right 
kind  of  man  is  to  the  fore  the  work  goes  on 
from  day  to  day,  surveys  are  made,  mineral 
-bodies  located,  opened  and  proved  up,  the 
machinery  does  get  in  place,  and  is  put 
through  its  adjustment,  till  finally  a  successful 
result  is  obtained,  the  mine  shows  a  profit,  ore 
in  abundance  is  in  sight,  and  the  triumph  is 
complete,  though  sometimes  it  takes  years  of 
effort  to  attain  it. 


XXI 

The  Gist  of  the  Whole  Matter 

Does  one  want  to  become  rich — one  can  be- 
come rich  through  intelligent  investments  in 
mining  stocks,  but  not  without  working.  In- 
vestigate— that  is  the  gist  of  the  whole  matter. 
One  may  make  some  money  by  a  lucky  stroke 
in  a  mining  risk,  but  if  one  is  lucky  one  does 
not  need  to  be  rich,  and  then  very  few  people 
are  lucky,  most  have  to  work  for  what  they 
obtain;  and  to  obtain  good  results  in  min- 
ing propositions  the  work  required  is  that  one 
should  investigate,  and  do  it  for  one's  self,  not 
depending  on  others.  We  have  read  of  a  great 
many  things  and  conditions  relating  to  mining, 
from  such  reading  one  should  know  along 
what  lines  to  investigate;  and  if  one  does  the 
work,  makes  real  personal  investigations,  and 
puts  together  the  independent  testimony  re- 
ceived from  different  sources,  and  then  uses 
good  judgment;  remembering  that  nothing  is 
sure  in  mining,  that  it  is  a  speculation,  not  an 
investment ;  that  even  with  the  best  care  losses 
must  be  expected,  and  that  the  money  is  placed 

199 


200  MINING  INVESTMENTS 

for  a  great  winning  or  a  total  loss,  because 
there  is  no  middle  ground,  if  the  mine  don't 
pay  it  is  a  total  loss,  but  if  it  does  pay  it  is  a 
tremendous  profit.  One  can  afford  to  lose 
something  where  such  great  profits  are  had, 
but  if  one  just  buys  mining  stocks  on  the 
recommendation  of  others,  and  takes  the 
chances,  the  chances  are  that  one  will  lose  with 
disheartening  regularity;  but  if  one  will  do  the 
work,  and  really  investigate,  one  will  make 
money  a  great  many  times,  and  this  is  the  gist 
of  the  whole  matter.  A  great  many  minor 
points  must  be  examined,  but  principally  one 
must  know  three  things:  first,  that  the  parties 
soliciting  the  use  of  his  money  have  got  a 
good  thing;  second,  that  they  have  the  ability 
to  obtain  good  results  out  of  a  good  thing  and 
third,  getting  such  results  that  they  are  honest 
enough  to  give  him  his  just  proportion  of  what 
they  obtain. 


APPENDIX. 

Tables  and  estimates  for  calculating  the 
values  of  mining  stocks. 

Republished  by  the  kind  permission  of  the 
Editors  of  the  Mining  World,  from  a  series  of 
articles  published  in  that  journal  during  1905 
and  subsequently  published  by  them  in  pam- 
phlet form  in  1906. 


201 


MINING   STOCKS 
How  to  Calculate  Their  Values 

No  investments  present  such  vicissitudes  of  for- 
tune as  mining  ventures.  There  is  scarcely  a  man 
in  our  country  who  has  not  at  one  time  or  another 
purchased  mining  shares  in  the  hope  that  he  might 
secure  an  investment  comparable  to  those  glittering 
examples  of  success  so  industriously  advertised  by 
the  promoter.  Yet  mining  is  a  good  business,  and 
it  is  desirable  that  investors  should  purchase  min- 
ing stocks. 

It  is  difficult  for  those  not  infermed  in  regard  to 
the  technicalities  of  mining  to  exercise  good  judg- 
ment as  to  what  they  should  and  what  they  should 
not  purchase,  and,  unfortunately,  very  few  are  suf- 
ficiently informed  to  know  even  what  points  should 
be  examined,  and  what  questions  asked,  in  order  to 
form  an  opinion  on  mining  investments. 

The  following  statements,  calculations  and  tables 
represent  an  effort  to  bring  together  material  which 
may  be  a  guide  to  the  proper  understanding  of  the 
risks  and  opportunities  in  mining  ventures. 

Certain  facts,  given  below,  should  be  borne  in 
mind  when  considering  this  class  of  investment. 

1.  There  is  no  middle  ground  in  a  mining  invest- 
ment; it  is  either  a  total  loss  or  a  profit.    In  other 
enterprises  a  reduced  rate  of  interest  or  even  losses 
may  be  recovered  later  by  better  business;  but  if 
mine  does  not  pay  it  is  a  total  loss. 

203 


V 

204  MINING  INVESTMENTS 

2.  There  is  no  mine  so  great  it  cannot  be  ex- 
hausted, consequently,   all  mines  must  be  worked 
out  in  time,  and  each  ton  of  mineral  taken  out  brings 
the  property  one  ton  nearer  to  the  point  where  all 
the  mineral  will  be  exhausted,  leaving  an  empty  shell 
of  stopes  and  shafts  from  which  no  further  returns 
can  be  expected. 

3.  The  all  important  question  is  not  the  dividends 
a  mine  may  be  paying,  but  the  quantity  of  mineral 
remaining  underground  from  which  dividends   can 
be  earned. 

4.  Mining,    because    of    the    possibility    of    rapid 
changes    from   nothing   to    discoveries    resulting   in 
enormous   wealth,    becomes    an   absorbing   passion. 
Hence  the  miner  frequently  loses  his  judgment  in 
his  hopes  like  the  gambler  expectant  of  good  for- 
tune. 

5.  When  enthusiastic  statements  are  made  about 
a  property  to  encourage  investments  one  should  not 
be  skeptical  of  the  miner's  honesty,  but  should  make 
careful  inquiry  and  consult  the  tables  herewith  pre- 
sented for  estimating  the  average  risk,  then,  if  the 
results  seem  favorable,  {he  investment  may  be  con- 
sidered. 

The  following  inquiries  should  be  made  before 
purchasing  any  mining  stocks,  no  matter  how  allur- 
ing the  prospectus. 

1.  Does  the  company  actually  own  its  property? 
This  can  be  learned  by  examining  the  record  of  the 
company's  titles. 

2.  Are  there  any  debts?     This  can  generally  be 
learned  from  the  reports  made  by  the  company's 
officers,  because  if  they  make  false  statements  they 
become  criminally  liable. 


AND  HOW  TO  JUDGE  THEM  205 

3.  Has  the  mine  been  examined  by  a  competent 
mining  engineer,  or  economic  geologist?     Inquiries 
should  be  made  as  to  where  the  person  writing  the 
report  pursued  his  studies,  what  practical  experience 
he  has  had  and  what  recognition  has  been  given  his 
work  by  technical  institutions. 

4.  Do  the  people  who  are  interested  in  the  com- 
pany understand  mining  as  a  business?     This   can 
be  learned  by  making  inquiries  among  people  asso- 
ciated with  reputable  mining  companies,  and  from 
the  references  presented  by  the  parties  interested. 

5.  Are  the  people  managing  the  company  worthy 
of  confidence?     For  this  information   consult  their 
references,  and  the  mercantile  agencies. 

If,  after  making  the  inquiries  outlined  above,  it 
is  found  that  the  company  does  not  actually  own 
but  proposes  to  acquire  a  property  it  may  have 
under  contract  (option);  or  that  debts  are  accumu- 
lating, or  that  the  report  recommending  the  prop- 
erty is  made  by  a  person  of  inferior  attainments; 
or  that  the  people  interested  in  raising  the  money 
are  simply  brokers  or  promoters  and  not  men  of 
practical  experience  in  mining  proper;  or  if  the  man- 
agement of  the  company  is  not  worthy  of  confi- 
dence, then  the  proposed  investment  should  be  most 
cautiously  considered  and  accepted  only  on  evidence 
of  very  strong  counterbalancing  advantages. 

If,  however,  the  inquiries  made  are  answered  sat- 
isfactorily, the  investment  may  be  considered  with 
favor,  but  it  will  always  be  subject  to  the  chances 
of  fortune  common  to  all  mining  operations.  What 
the  chances  of  fortune  are  may  be  approximately 
estimated  by  using  the  tables  herewith. 

Mining  stocks  are  valued  only  by  the  dividends 
they  will  pay.  These  payments  can  be  maintained 


206  MINING  INVESTMENTS 

only  so  long  as  valuable  mineral  is  mined,  after 
which  the  stock  of  the  company  is  worthless.  There- 
fore, the  cash  value  of  a  mining  stock  should  be  the 
present  worth  of  prospective  dividends.  The  chance 
of  not  receiving  the  dividends  is  always  threatening, 
but  there  is  also  in  every  mine  some  opportunity 
for  rich  discoveries  which  will  result  in  a  higher 
rate  of  dividend;  these  two  elements  of  risk  in  some 
measure  balance  each  other.  While  the  present 
worth  of  prospective  dividends  is  a  fair  basis  on 
which  to  calculate  the  value  of  a  mining  investment 
this  alone  is  not  sufficient;  one  must  be  a  keen  judge 
of  future  prospects,  and  be  well  enough  informed 
to  know  how  much  valuable  mineral  may  remain 
in  the  mine,  because  from  this  "reserve"  only  can 
dividends  be  paid. 

The  life  of  a  mine,  that  is  the  period  during  which 
it  can  pay  dividends,  is  variable.  There  are  a  few 
famous  mines  which  are  apparently  inexhaustibly 
supplied  with  ore,  but  such  mines  are  rare.  Since 
the  life  of  most  mines  is  limited  a  cautious  investor 
in  figuring  a  present  worth  for  prospective  dividends 
should  make  his  calculations  on  a  short  dividend 
paying  period,  except  when  considering  well  estab- 
lished mines  with  substantial  ore  reserves. 

Following  is  a  table  of  mining  values,  without 
interest,  based  on  20  per  cent,  dividends,  the  amount 
invested  being  $100. 


Year 
First     

Dividends 
received 

$20 

Loss  if 
mine  fails 
80% 

Second  

40 

60% 

Third     

60 

40% 

Fourth       

80 

20% 

Fifth... 

IOO 

Nil,  except  interest 

Should  the  mine  continue  to  pay  after  five  years 
the  values  then  remaining  are  clear  profit.    In  this 


AND  HOW  TO  JUDGE  THEM  207 

simple  table,  however,  interest  is  not  taken  into 
account.  A  comparison  may  be  made  between  $100 
invested  at  6  per  cent.,  and  $100  invested  in  mines 
at  20  per  cent.,  crediting  the  6  per  cent,  each  year 
to  the  secured  investment,  and  deducting  the  6  per 
cent,  each  year  from  the  mining  investment.  Re- 
member that  20  per  cent,  return  on  a  dangerous  in- 
vestment is  not  20  per  cent,  net  profit,  since  the 
money  would  produce  6  per  cent,  on  a  better  secur- 
ity; the  real  profit  is  the  difference,  or  14  per  cent, 
annually. 

The  following  table  shows  the  value  of  mining  in- 
vestments as  compared  with  investments  whose 
principal  is  secured.  Mining  investment  to  pay  20 
per  cent.,  secured  principal  to  pay  6  per  cent,  per 
annum.  Amount  invested  $100  in  each  case: 

Sioo  on  Good  Security  Sioo  in  Mining  Stocks 

Divi-        If  mine 

Year  Int.  6%  Year  dend,  20%        fails 

Amt. 

First $  6 

Second 12 

Third 18 

Fourth 24 

Fifth 30 

Sixth 36 

Seventh 42 

Eighth 48 

Ninth 54 

Tenth 60 


*  Equal  to  ij^%  per  annum  for  the  eight  years, 
t  Equal  to  2.88%  per  annum  for  the  nine  years, 
j  Equal  to  4%  per  annum  for  the  ten  years. 

At  the  end  of  the  tenth  year  it  is  apparent  that 
a  mine  paying  20  per  cent,  in  dividends  per  annum 
has  returned  the  principal  and  100  per  cent.,  but  it 
is  not  so  readily  understood  that  this  100  per  cent, 
cannot  be  considered  as  net  profit.  The  same  money 
on  reasonable  security  would  have  produced  $60,  and 
if  at  the  end  of  the  ten  years  the  mine  is  exhausted 


268  MINING  INVESTMENTS 

the  returns  will  be  $100  principal,  $60.00  interest  and 
$40.00  profit,  the  mine  produced  $200,  and  the  real 
profit  in  ten  years  is  $40,  equivalent  to  4  per  cent,  net 
profit  per  annum  after  deducting  principal  and  inter- 
est. If  at  the  end  of  ten  years  the  mine  is  exhausted 
the  profit  has  been  only  4  per  cent.,  but  should  it  con- 
tinue to  pay  the  profit  is  larger.  From  the  tabu- 
lated results  the  conclusion  is  reached  that,  after 
allowing  for  principal  and  interest,  if  the  mine  pays 
20  per  cent,  for  eight  years,  there  is  a  slight  profit; 
if  for  ten  years,  it  is  a  fair  profit,  and  if  it  pay  20 
per  cent,  more  than  ten  years  there  is  a  very  good 
profit. 

Ten  years,  however,  may  be  regarded  a  rather 
long  average  for  the  life  of  most  mines,  but  with 
a  dividend  of  20  per  cent,  the  money  invested  is  re- 
turned in  five  years,  at  the  end  of  which  period  the 
loss,  if  the  mine  fails,  is  simply  the  interest.  A  fair 
calculation  in  determining  the  value  of  a  mining 
share  is  five  years'  dividends  estimated  at  the  rate 
the  mine  may  be  paying.  If  the  mine  were  well  es- 
tablished the  time  for  calculating  the  value  of  its 
shares  might  be  extended  to  ten  years,  but  if  the 
shares  were  purchased  on  such  a  valuation  the  in- 
vestor would  require  ten  years'  continuous  dividends 
before  his  money  could  be  returned  without  interest, 
and  this  is  a  rather  slow  proposition. 

In  some  great  mines  where  large  ore  reserves, 
sufficient  for  many  years'  working,  have  been 
proved  up,  the  shares  become  a  business  proposition, 
and  their  value  can  be  safely  estimated  according  to 
the  worth  of  the  ore  in  sight  and  the  cost  of  mining 
and  milling  it;  but  for  ordinary  mines  the  tables 
above  will  be  found  serviceable  in  estimating  stock 
values. 


AND  HOW  TO  JUDGE  THEM  209 

If  the  values  of  mining  shares  are  calculated 
at  compound  interest  the  results  will  be  much  more 
favorable  to  the  investment,  but  as  there  is  always 
a  risk  that  the  mine  may  fail,  compound  interest 
valuations  cannot  be  considered  equitable,  excepting 
that  a  deduction  is  made  to  allow  for  this  risk,  this 
deduction  bringing  the  computation  to  about  the 
basis  of  simple  interest;  therefore  a  compound  in- 
terest calculation  should  be  considered  only  as  an 
interesting  tabulation  of  values  to  be  obtained  if 
the  mine  continues  paying  for  a  long  term  of  years. 

The  table  below  shows  the  returns  from  mining 
shares  paying  20  per  cent  per  annum  (dividends  re- 
invested in  the  same  mine  at  the  same  rate  annually) 
as  compared  with  money  at  6  per  cent,  compound 
interest  on  good  security.  Amount  invested  in  each 
case  is  $100. 

Year                                                                 Interest  6%  Amount 

First $6.00  $106.00 

Second 12.36  112.36 

Third ...  19.10  119.10 

Fourth 26.25  126.25 

Fifth 33.83  133-83 

Sixth 41.86  141.86 

Seventh 50.37  150.37 

Eighth 39-39  159-39 

Ninth 68.95  168.95 

Tenth 79-09  179.09 

Year  Dividend  20%,  reinvested 

First $20.00  **6%  principal  remaining  at  risk 

Second 44.00  69.36%  principal  remaining  at  risk 

Third 72.80  46.30%  principal  remaining  at  risk 

Fourth 107.36  18.89%  principal  remaining  at  risk 

Fifth 148.83  15%  Gain,      3%        per  annum 

Sixth 198.60  56.74%  Gain,      9.46%  per  annum 

Seventh 258.32  io?.95%r  Gain,     15.42%  per  annum 

Eighth 329-98  170.59%  Gain,    21.32%,  per  annum 

Ninth 415.98  247.03%  Gain,    27.44%  P"  annum 

Tenth 519.18  340.09%  Gain,    34.01%  per  annum 

From  these  tables,  calculating  the  value  of  mining 
shares,  one  at  simple,  the  other  at  compound,  in- 
terest, it  is  evident  that  a  mine  paying  20  per  cent. 


210  MINING  INVESTMENTS 

annually  for  ten  years  and  then  failing  would  have 
returned  at  simple  interest  an  amount  equal  to  4 
per  cent,  per  annum  profit  above  the  return  from  a 
secured  investment  paying  6  per  cent.  A  simple  in- 
terest investment  account  is  one  where  the  income 
is  used  and  produces  nothing  more  for  the  person 
receiving  it.  Where  the  dividends  are  reinvested 
(which  unfortunately  is  not  frequent),  the  invest- 
ment account  can  be  considered  on  a  compound  in- 
terest basis,  and  at  the  end  of  the  tenth  year  will 
have  shown  earnings  equal  to  34.01  per  cent,  per  an- 
num above  the  highest  ordinary  rate  of  6  per  cent, 
per  annum.  This  calculation  is  theoretical,  for  if 
at  the  end  of  ten  years,  or  at  any  previous  time,  the 
mine  became  exhausted,  all  the  money  invested 
would  be  lost,  though  the  investor  had  received  an 
amount  equal  to  34  per  cent,  more  than  the  6  per 
cent,  rate  per  annum.  Here  the  act  of  investment, 
not  the  calculation,  would  be  at  fault. 

This  condition  emphasizes  the  importance  of  the 
question,  How  far  is  it  safe,  or  speculatively  de- 
sirable, to  invest  in  the  shares  of  an  old  mine  which 
has  paid  dividends  for  any  considerable  period? 

As  an  average  proposition  to  invest  on  the  basis 
of  a  cash  price  equal  to  five  years'  dividends  seems 
reasonable,  the  probabilities  of  receiving  one's  money 
again  are  fair  and  it  is  also  likely  that  at  the  end 
of  five  years  the  stock  will  still  be  worth  something, 
perhaps  nearly  as  much  as  the  original  investment, 
thus  making  mining  investments  attractive  to  those 
who  understand  them.  As  a  matter  of  fact,  how- 
ever, the  mine  in  which  an  investment  has  been 
made  must  at  some  time  become  exhausted,  sug- 
gesting that  mining  stocks  should  never  be  consid- 
ered as  permanent  investments.  It  is  for  this  reason 


AND  HOW  TO  JUDGE  THEM  211 

that  conditions  relating  to  the  future  of  a  mining 
property  should  be  carefully  studied. 

An  Inquiry  in  Relation  to  the  Prospective  Values 
in  an  Old  Dividend  Paying  Mine. 

It  is  usual  that  stocks  in  old  established  mines 
sell  above  their  worth  because  the  claim  for  almost 
unlimited  mineral  deposits  is  more  easily  maintained 
in  the  case  of  a  large  producer  than  for  a  property 
that  has  yet  to  make  its  reputation;  though  it  may 
be  that  the  large  producer  is  rapidly  approaching 
the  time  when,  its  mineral  deposits  becoming  ex- 
hausted, it  will  be  of  no  further  value.  There  are,  as 
previously  stated,  famous  mines  with  apparently  an 
almost  unlimited  quantity  of  mineral  to  draw  from, 
but  these  properties  are  few  in  number,  while  un- 
fortunately many  mines  once  famous  are  now  aban- 
doned, or  they  are  struggling  along  in  hopes  of  un- 
covering new  mineral  bodies.  A  mine  at  the  height 
of  its  greatest  prosperity  may  be  in  rapid  approach 
to  its  point  of  final  exhaustion.  In  view  of  these 
conditions  the  following  points  should  be  considered 
in  estimating  the  value  of  stocks  in  an  established 
mine. 

First — Calculate  the  value  of  the  whole  mine  as 
represented  by  the  price  of  its  shares.  To  ascertain 
this,  multiply  the  price  of  one  share  by  the  total 
number  of  shares.  Is  the  mine  worth  that  much? 

Second — In  all  established  mines  a  portion  of  the 
value,  is,  or  ought  to  be,  secured  by  mineral  in  sight. 
Take  the  estimated  value  of  the  mineral  in  sight, 
less  mining  and  milling  charges,  and  divide  it  by 
the  number  of  shares  in  the  whole  mine;  this  will 


212  MINING  INVESTMENTS 

show  what  proportion  of  assured  value  there  is  for 
each  share,  and  this  assured  value  can  be  compared 
with  the  price  of  the  shares  to  ascertain  how  much 
of  that  price  is  for  assured  values,  and  how  much 
for  prospective  values. 

In  estimating  the  ore  in  sight,  and  in  estimating 
the  assured  value  of  a  property's  shares  an  allow- 
ance should  be  made  for  the  risks  in  taking  the  min- 
eral out,  and  the  dangers  attending  mining.  In- 
quiry should  also  be  made  as  to  whether  the  mineral 
in  sight  is  blocked  out  and  measured,  or  whether 
it  is  in  sight  simply  by  estimates  from  surround- 
ing conditions;  in  the  latter  case  a  considerable  re- 
duction should  be  made  to  allow  for  the  risk  of 
errors  in  estimating  mineral  in  sight  without  actually 
measuring  it. 

Third — Treat  the  unseen  portions  of  the  mine 
from  precisely  the  same  point  of  view  as  one  would 
in  considering  an  undeveloped  property.  In  an  es- 
tablished mine  great  returns  are  always  expected 
from  its  undeveloped  ground  because  of  its  past 
record,  and  for  this  there  is  frequently  good  reason, 
but  the  undeveloped  ground  has  not  been  seen,  all 
unseen  ground  is  a  risk,  and  the  future  of  dividend 
paying  mines  in  relation  to  their  undeveloped 
ground  is  a  risk,  on  the  same  basis  that  any  unseen 
ground  or  prospect  is  a  risk.  In  a  dividend  paying 
mine,  however,  one  has  more  data  to  estimate  what 
the  risk  really  is.  In  estimating  the  chances  for  a 
future  profit  beyond  the  value  of  the  mineral  in 
sight  treat  all  the  unseen  ground  as  a  prospect  and 
be  guided  accordingly. 

Misapprehension  is  frequently  by  reason  of  the 
high  par  value  that  is  often  placed  on  mining  shares. 
In  the  other  extreme  the  true  position  of  a  share- 


AND  HOW  TO  JUDGE  THEM  213 

holder  is  frequently  obscured  because  of  the  issue 
of  a  great  number  of  shares  at  a  low  par  value. 

Under  the  laws  of  many  states  mining  stock  can 
be  issue  in  excessive  amounts  full  paid  in  consider- 
ation of  a  mine  transferred  to  a  company  in  ex- 
change for  its  stock.  The  way  is  open  for  exces- 
sive capitalization,  and  this  is  frequent.  In  consid- 
ering the  offer  of  a  $1  share  for  five  cents,  or  a  $10 
share  for  50  cents,  or  a  $50  share  for  $2.50,  the  par 
value  should  be  entirely  disregarded.  The  par  value 
of  the  shares  is  not  the  point  an  investor  should 
consider;  the  real  question  is,  How  many  shares  are 
there?  If  there  are  100,000  shares  selling  at  50  cents 
each,  the  whole  mine  is  selling  on  the  basis  of  $50,- 
000,  and  the  owner  of  one  share  holds  1-100,000  of 
that  property.  If  in  the  same  mine  there  are  1,000,- 
000  shares  selling  at  5  cents  each,  the  property  is 
marketed  on  the  basis  of  $50,000;  but  the  holder  of 
one  share  has  only  1-1,000,000  of  the  whole  property; 
and  it  matters  not  whether  a  share  has  a  par  value 
of  $1  or  $1,000,  the  owner  will  be  entitled  to  his 
pro  rata  of  the  value  of  the  ore  taken  out  of  the 
mine  after  deducting  expenses,  and  nothing  more. 

Table  for  Determining  Approximately  the  Propor- 
tionate Risk  in  a  Mining  Investment. 

Table  of  assured  values  for  mineral  in  sight,  and 
the  proportionate  risk  for  unseen  ground: 

The  mineral  in 'sight  rep-  For  the  unseen  ground, 

resents  of  the  amount  The  risk  is  for  the  total 

invested.  amount  invested. 

100%  o% 

95  S 

go  10 

85  IS 

So  20 

75  25 


214  MINING  INVESTMENTS 

The  mineral  in  sight  rep-  For  the   unseen   ground, 

resents  of  tee  amount  The  risk  is  for  the  total 

invested.  amount  invested. 

70  30 

65  35 

60  40 

55  45 

50  50 

45  55 

40  60 

35  65 

30  70 

25  75 

20  80 

15  85 

10  90 

5  05 

O  IOO 

To  ascertain  the  approximate  chance  of  obtain- 
ing a  profit  for  the  risk  taken  use  the  following 
table  as  directed. 

The  table  is  arranged  in  ten  columns,  each  col- 
umn representing  one  of  the  conditions  because  of 
which  the  vicissitudes  of  mining  investments  usually 
arise.  Through  the  columns  ten  spaces  are 
ruled,  and  in  each  space  a  grade  of  condition  is 
noted  from  the  very  best  conditions  that  could  be 
found  placed  at  the  top  of  the  column  and  rated  as 
ten;  that  is,  ten  chances  in  ten,  of  a  certainty,  of  a 
profitable  investment;  to  the  poorest  conditions 
from  which  any  possible  returns  could  be  had,  placed 
in  the  next  to  the  last  line  of  spaces,  and  rated  as  1 
and  representing  only  one  chance  in  ten  of  a  profit- 
able investment.  The  spaces  are  rated  as  10  down 
to  1  and  a  line  of  spaces  rated  as  0  is  added  to  the 
table  to  represent  the  conditions  under  which  it  is 
impossible  that  profits  could  be  made  from  a  mining 
investment. 

The  cost  of  mining  and  delivering  the  mineral  is 
a  risk,  and  in  the  maintenance  of  the  engineering 
on  an  efficient  basis  there  is  a  slight  risk;  these  can 


AND  HOW  TO  JUDGE  THEM  215 

generally  be  calculated  and  are  therefore  not  tabu- 
lated. 

There  is  some  risk  because  of  unskilled  or  dis- 
honest management,  but  American  laws  provide  the 
means  by  which  an  investor  can  protect  himself  in 
such  matters;  and  as  a  general  proposition  this  risk 
can  be  allowed  for  by  deducting  one-half  to  one 
chance  in  ten  from  the  results  found  by  using  the 
table. 

Before  proceeding  to  an  examination  of  the  table 
it  may  be  well  to  consider  briefly  what  an  element 
of  chance  really  represents. 

Among  the  tabulated  classifications  even  chances 
are  represented  by  five.  A  familiar  example  of  even 
chances  is  matching  pennies,  the  chances  are  exactly 
equal;  and  it  is  a  remarkable  fact  that  if  some 
thousands  of  pennies  are  matched  it  will  be  found 
that  they  are  almost  equally  divided.  An  investor 
putting  money  in  a  mine  where  the  chances  are 
equal  has  the  same  opportunity  to  make  a  profit  as 
if  he  were  matching  pennies.  If  the  chances  are  as 
four  in  ten,  or  one  less  than  even,  he  takes  the 
same  risk  as  he  would  when  matching  pennies  under 
an  obligation  to  give  away  one  out  of  every  five  he 
secured;  if  the  chances  were  as  three  in  ten  it  is  as 
if  two  out  of  every  five  secured  were  given  away, 
and  so  on  through  all  the  table.  Where  the  rate  is 
better  than  even  chances  the  relation  can  be  ex- 
plained by  supposing  additions  to  the  winnings  in 
the  same  proportion  as  stated  for  reductions  from 
the  winnings  where  the  risks  are  rated  below  even 
chances. 

No  man  can  be  infallible  in  judging  and  estimating 
unseen  ground,  and  mines  considered  absolutely 
worthless  have  returned  remarkable  profits,  while 


216  MINING  INVESTMENTS 

mines  reported  on  as  the  best  by  competent  authori- 
ties have  later  proved  disastrous  failures;  but  such 
instances  are  extremely  rare,  and  should  not  be  con- 
sidered by  a  careful  investor. 

In  writing  of  mining  risks  and  chances  as  com- 
pared with  matching  pennies  a  more  accurate  basis 
might  be  the  comparison  as  above  stated  with  the 
chance  added  that  a  great  prize  might  be  had  with 
one  or  more  of  the  pennies  secured;  such  a  chance 
certainly  exists  in  mining,  and  is  the  reason  why 
almost  every  bit  of  mineral  found,  even  though  the 
surroundings  are  unfavorable,  is  prospected  and  gen- 
erally opened  to  a  considerable  extent  under  a  dead 
loss  because  of  hopes  that  it  may  lead  to  a  valuable 
deposit. 

Explanations  For  Using  the  Table. 

First — Ascertain  the  assured  value  from  a  cal- 
culation or  estimate  of  the  value  of  the  mineral 
in  sight;  deduct  from  this  a  reasonable  sum  for 
the  risk  and  expense  of  mining,  milling  and  mainte- 
nance as  the  circumstances  may  require.  The  re- 
sult will  be  an  estimate  of  the  assured  values  which 
may  be  credited  to  the  mine,  and  which  divided  by 
the  number  of  shares  will  give  the  assured  value 
per  share.  If  the  assured  values  indicate  a  profit 
on  the  amount  invested  it  is  a  business  proposition 
to  which  the  investor  may  add  the  chances  for  a 
further  profit  as  may  be  indicated  by  an  estimate  of 
the  value  of  the  unseen  ground  as  shown  in  the 
table.  If.  however,  the  prorata  of  assured  values 
per  share  do  not  equal  the  price  at  which  the  stock 
is  offered,  the  difference  is  at  risk. 

Second— After  estimating  the  assured  values  let 


AND  HOW  TO  JUDGE  THEM  217 

all  the  balance  of  the  proposed  investment  be  for 
unseen  ground  and  taken  as  a  risk.  Estimate  the 
chances  in  this  risk  by  considering  each  column  of 
conditions  in  the  larger  table  and  check  in  each  col- 
umn the  division  which  most  nearly  represents  the 
conditions  at  the  mine.  Add  together  the  values 
tabulated  for  each  division  which  may  have  been 
checked,  and  divide  by  ten,  the  result  will  be  ap- 
proximately the  average  chances  in  ten  for  a  profit- 
able investment  under  the  conditions  surrounding 
the  property  which  may  be  under  consideration. 

To  allow  for  the  risk  of  loss  because  of  unskilled 
or  dishonest  management  subtract  one-half  to  one 
or  even  more  from  the  results  obtained  as  the  case 
may  require. 

Third — If  the  mine  is  simply  a  prospect  proceed 
in  the  same  manner,  but  without  allowing  for  as- 
sured values  because  of  mineral  in  sight. 

Fourth — Wherever  a  zero  condition  is  found  indi- 
cating circumstances  under  which  it  would  be  an 
impossibility  that  any  returns  could  be  had  do  not 
make  an  average  of  chances,  because  one  zero  con- 
dition could  not  be  compensated  by  other  conditions, 
however  favorable,  and  where  a  zero  condition  is 
found  for  a  property  which  may  be  under  consider- 
ation that  property  should  be  rejected. 

I. 

Amount  of  Ore  and  Associated  Minerals  in  Sight. 

10.    Assured. 

Unusually  extensive. 
9.    Superior. 
Extensive. 


218  MINING  INVESTMENTS 

8.  Very  good. 

Large. 
7.    Good. 

Above  average. 

6.  Fair. 

Rather  good. 
5.    Passable. 

Fair  average. 
4.    Poor. 

Rather  inferior. 
3.    Very  poor. 

Inferior. 
2.    Bad. 

Small. 
1.    Very  bad. 

Very  small. 
0.    Outclassed. 

Tiny  bits  of  no  importance. 

II. 

Condition  and  Extent  of  Walls,  Roofs,  Floors  or 
Outcropping. 

10.    Assured. 

Unusually  regular  and  extensive.     Unmistak- 
able evidence  of  continuity  and  permanence. 

9.  Superior. 

Regular  and  extensive,  good  evidences  of  con- 
tinuity and  permanence. 
8.    Very  good. 

Fairly   regular,    fairly   extensive,    with    some 
evidences  of  continuity  and  permanence. 

7.  Good. 

Slightly  irregular,  fairly  extensive,  not  against 
probable  continuity  and  permanence. 


AND  HOW  TO  JUDGE  THEM  219 

6.    Fair. 

Irregular,    fairly    extensive,     continuity    and 
permanence   not   indicated,   but   reasonably 
in  expectation. 
5.    Passable. 

Irregular,     not     extensive.      Continuity     and 

permanence  somewhat  doubtful. 
4.    Poor. 

Decidedly  irregular,  not  extensive,  continuity 

and  permanence  doubtful. 
3.    Very  poor. 

Broken  and  irregular,  rather  small,  evidences 
rather   against   continuity  and   permanence. 
2.     Bad. 

Broken,  very  irregular  and  small.     Evidences 

against  continuity  and  permanence. 
1.    Very  bad. 

Very    irregular    and    very    small.      Evidences 
*   decidedly    against    continuity    and    perma- 
nence. 
0.    Outclassed. 

Continuity  and  permanence  demonstrably  im- 
possible. 

III. 

Chemical   and  Physical   Conditions  of  Surrounding 
Formation  in  Relation  to  the  Mineral  Found. 

10.    Assured. 

Unusually  favorable.     Very  regular.     Broadly 
continuous,  demonstrating  depth  or  extent. 
9.    Superior. 

Favorable,    regular,    continuous.      Promising 
depth  or  extent. 


220  MINING  INVESTMENTS 

8.     Very  good. 

Neither  favorable  or  unfavorable.  Regular, 
continuous  promising  depth  or  extent. 

7.    Good. 

Favorable  but  irregular.  Possible  change  to 
unfavorable. 

6.    Fair. 

Favorable  but  irregular,  broken.  Might 
change  to  unfavorable.  Some  indications 
of  faults. 

5.    Passable. 

Neither  favorable  nor  unfavorable.  Irregular 
broken.  May  become  unfavorable.  Some 
faults  indicated. 

4.    Poor. 

Chemically  unfavorable  to  mineral  found, 
but  very  regular  promising  depth  or  broad 
extent  of  formation. 

3.    Very  poor. 

Chemically  favorable,  but  very  irregular. 
Badly  broken,  serious  faults  indicated. 

2.    Bad. 

Neither  favorable  or  unfavorable.  Very  ir- 
regular, badly  broken.  Serious  faults  indi- 
cated. 

1.    Very  bad. 

Unfavorable,    very    irregular,    badly    broken. 

Serious  faults  clearly  indicated. 
0.    Outclassed. 

Under  which  the  mineral  found  could  not  exist 
in  merchantable  quantities. 


AND  HOW  TO  JUDGE  THEM  221 

IV. 

Extent  and  Distribution  of  Numeralization  Within 
the  Deposit. 

10.    Assured. 

Unusually  regular,  even  and  continuous;  de- 
monstrating permanent,  very  extensive  nu- 
meralization. 
9.    Superior. 

Regular,  continuous,  promising  permanent  ex- 
tensive mineralization. 
8.    Very  good. 

Continuous,  not  entirely  regular,  slight  doubts 

as  to  permanent  extensive  mineralization. 
7.    Good. 

Continuous,    somewhat    irregular,   some   por- 
tions might  be  unprofitable. 
6.    Fair. 

Continuous    but    uneven.       Indications    that 

some  portions  would  not  be  profitable. 
5.    Passable. 

Not  entirely  continuous,  uneven.    Indications 

of  some  unprofitable  zones. 
4.    Poor. 

Not    continuous,    decidedly   uneven.      Indica- 
tions of  unprofitable  zones. 
3.    Very  poor. 

Distribution  so   irregular,  workable   only  by 

sorting,  unprofitable  zones. 
2.    Bad. 

Very  irregular,  spotty.     Much  dead  work  to 
obtain  any  good  material. 


222  MINING  INVESTMENTS 

1.    Very  bad. 

Spots   only.     Doubts  of   sufficient  good  ma- 
terial to  compensate  working. 
0.    Outclassed. 

Mineralization  in  small  isolated  spots  where 
demonstrably  no  profit  could  be  maue. 

V. 

Value  of  Mineral  Found. 

10.    Assured. 

Better  than   the   highest   commercial   grades. 
Profits  amply  secure  beyond  possible  fluctu- 
ations. 
9.    Superior. 

A  high   commercial   grade,  margin  of  profit 

commercially  sure. 
8.    Very  good. 

Commercial  grade  of  fine.    Profits  secure  ex- 
cept during  great  depression. 
7.    Good. 

Commercial  grade  good,  margin  of  profit  se- 
cure under  ordinary  conditions. 
6.    Fair. 

Commercial  grade  fair,  margin  of  profit  sub- 
ject to  market  fluctuations. 
5.    Passable. 

Commercial    grade    salable.     With   favorable 

market  fair  margin  of  profit. 
4.    Poor. 

Sufficient  to  pay  expenses  but  no  profit. 
3.    Very  poor. 

A  loss  but  not  over  33  1-3  per  cent.    Worked 
in  hopes  of  better  development. 


AND  HOW  TO  JUDGE  THEM  223 

2.    Bad. 

A  loss  but  not  over  50  per  cent    Worked  in 

hopes  of  better  development. 
1.    Very  bad. 

Loss  more  than  66  2-3  per  cent.    Worked  on 

speculation  for  better  developments. 
0.    Outclassed. 

So  low  that  no  profit  would  be  possible. 

VI. 

Composition  of  Mineral  and  its  Facilities  for  Treat- 
ment. 
10.    Assured. 

Unusually  favorable  yielding  finest  results  by 

simplest  treatment. 
9.     Superior. 

Favorable,    yielding    satisfactory    returns    by 

ordinary  treatment. 
8.    Very  good. 

Generally  favorable.     Results   a   little  below 

expectations  by  ordinary  treatment. 
7.    Good. 

Slightly   complex.     Results   fairly   profitable; 
not  entirely  satisfactory  by  ordinary  treat- 
ment 
6.    Fair. 

Complex,  some  profit  by  ordinary  treatment. 
5.    Passable. 

Complex.     Irregular.     A   profit   by   ordinary 

treatment  after  careful  sorting. 
4.    Poor. 

Complex,  undesirable  constituents.  Requires 
special  treatment  before  profits  can  be  ex- 
pected. 


224  MINING  INVESTMENTS 

3.    Very  poor. 

Complex,  irregular.    Undesirable  constituents 

make  results  somewhat  doubtful. 
2.    Bad. 

Complex,    irregular,    undesirable    constituents 
abundant,  grave  doubt  of  successful  treat- 
ment. 
1.    Very  bad. 

Undesirable  constituents  and  conditions  very 
prevalent,  profits  only  by  successful  treat- 
ment can  be  found. 
0.    Outclassed. 

Of   such   character   that   no   profit  could   be 

made  by  any  known  method. 
VII. 

Natural  Supplies  Water,  Timber,  Labor,  Etc. 

10.     Assured. 

Assuredly  abundant  at  all  times  at  a  mini- 
mum cost. 
9.    Superior. 

Abundant,  easy  to  obtain,  and  at  a  low  cost. 
8.    Very  good. 

Sufficient,  not  difficult  to  obtain  at  ordinary 

cost. 
7.    Good. 

Sufficient  for  ordinary  needs  during  a  reason- 
able time.    Cost  rather  above  average. 
6.    Fair. 

Sufficient    with    careful    management.      Cost 

above  average. 
5.    Passable. 

Rather    inferior    amounts.      Cost    decidedly 
above  average. 


AND  HOW  TO  JUDGE  THEM  225 

4.    Poor. 

Inferior,  and  at  a  cost  to  rather  tax  oper- 
ations. 
3.    Very  poor. 

Scarce,   cost   heavy,  a  serious  tax   on   oper- 
ations. 
2.    Bad. 

Deficient,  cost  a  tax  on  operations  sufficient 

to  jeopardize  results. 
1.    Very  bad. 

Very  deficient.     Cost  very  excessive  making 

profits  seriously  doubtful. 
0.    Outclassed. 

So   poor   and   at   such   cost   that   no   profits 
would  be  possible. 

VIII. 

Topographical   and   Physical    Conditions.     Dangers 
From  Excessive  Water,  Collapses,  Poison- 
ous Gases,  Etc. 

10.    Assured. 

Every  facility  for  mining  at  a  minimum  cost 

unusual  security  against  dangers. 
9.    Superior. 

Facilities  for  mining  at  a  low  cost.    No  dan- 
gerous conditions  indicated. 
8.    Very  good. 

No  special  difficulty  or  impediment  in  mining. 

The  ordinary  dangers  only. 
7.    Good. 

Slight  difficulties  to  overcome  and  consequent 
dangers  a  little  above  the  average. 


226  MINING  INVESTMENTS 

6.     Fair. 

Engineering    difficulties    and    dangers   beyond 
the  average,  but  not  at  all  unsurmountable. 
5.    Passable. 

Special    engineering    to    overcome    difficulties 

and  danger  before  deposits  are  available. 
4.    Poor. 

Available    if    special    engineering    overcomes 
difficulties  and  dangers.     Results  somewhat 
doubtful. 
3.    Very  poor. 

Probably     available     if     special     engineering 
overcomes    difficulties    and    dangers.      Re- 
sults doubtful. 
2.    Bad. 

Questionably   available    provided    special    en- 
gineering overcomes  difficulties  and  dangers. 
Chances  against  successful  engineering. 
1.    Very  bad. 

Possibly  available  if  special  engineering  over- 
comes difficulties  and  dangers,  but  these  so 
formidable   that   results   are  very   doubtful. 
0.    Outclassed. 

Engineering    dangers,    and    difficulties    which 
demonstrably  could  not  be  overcome. 

IX. 

Political  Conditions. 


10.    Assured. 

Absolute  security  under  good  laws  and  peace- 
ful tenure  of  occupancy. 


AND  HOW  TO  JUDGE  THEM  227 

9.    Superior. 

Good  security,  good  laws,  peaceful  occupancy; 
only  the  ordinary  disturbances  of  mining 
camps. 

8.    Very  good. 

Good  laws  to  back  enterprise,  but  some  dan- 
gerous  conditions  in  local  surroundings. 
7.    Good. 

Laws,  judiciary  and  public  order  not  entirely 

secure,  nor  yet  seriously  dangerous. 
6.    Fair. 

Such  that  enterprise  must  depend  somewhat 
on  its  own  strength  for  security. 

5.    Passable. 

Such  that  enterprise  must  look  well  to  its  own 
strength  for  security. 

4.    Poor. 

Beyond  the  protection  of  law,  but  dangers 
not  very  seriously  threatening. 

3.    Very  poor. 

Beyond  the  protection  of  law,  threatening 
dangers  require  strength  to  protect  interests. 

2.    Bad. 

Must  expect  aggression  from  surrounding 
dangers,  and  dishonest  officials. 

1.    Very  bad. 

Grave  dangers  causing  doubts  as  to  mainte- 
nance of  enterprise  under  such  surround- 
ings. 

0.    Outclassed. 

Dangers  and  complications  so  great  that  no 
enterprise  could  be  maintained. 


228  MINING  INVESTMENTS 

X. 

Accessibility. 

10.    Assured. 

Every  advantage,  lowest  grade  mineral 
salable.  General  supplies  at  less  than  ordi- 
nary quotations. 

9.    Superior. 

Without  difficulties,  all  but  lowest  grade  min- 
eral salable,  supplies  at  current  quotations. 

8.    Very  good. 

Without  difficulties.  Distance  prevents  sale 
of  lower  grade  minerals.  Supplies  rather 
expensive. 

7.    Good. 

Requiring  expenditure  of  capital  before  any 
but  selected  grades  salable.  Supplies  ex- 
pensive. 

6.    Fair. 

Requiring  expenditures  before  any  but  high- 
est grade  ores  could  be  sold. 
5.    Passable. 

So  situated  that  no  ore  could  be  sold.    Works 

required  for  milling  or  smelting. 
4.    Poor. 

Requiring    works    for    treatment    with    some 
danger  that  machinery  cannot  be  delivered 
on  the  property. 
3.    Very  poor. 

Danger  of  non-successful  delivery  of  machin- 
ery on  the  property  such  as  require  careful 
consideration. 


AND  HOW  TO  JUDGE  THEM  229 

2.    Bad. 

Distances  and  difficulties  are  such  that  suc- 
cessful establishment  of  machinery  is  doubt- 
ful. 
1.    Very  bad. 

Such  that  successful  establishment  of  works 

to  utilize  mineral  is  extremely  doubtful. 
0.    Outclassed. 

Inaccessible,  where  mineral  found  could  not 
possibly  compensate  for  machinery  and  im- 
provements. 

Mining  Risks   Compared  With   Gambling  Hazards. 

Having  considered  the  advantages  and  disadvan- 
tages of  a  mining  venture,  and  decided  whether  one 
should  or  not  take  the  risk,  the  fact  that  money  so 
used  is  at  hazard,  put  out  for  a  great  winning  or  a 
total  loss,  should  be  fully  realized.  Mining  risks 
are  to  some  extent  similar  to  gambling  chances,  with 
the  difference  that  the  chances  of  winning  from  the 
mines  are  much  more  favorable,  and  furthermore, 
mining  is  legitimate  and  honorable,  where  one  suc- 
cess brings  prosperity  and  employment  to  thousands 
and  returns  profits  sufficient  to  compensate  for  nu- 
merous losses.  It  must  be  remembered  that  great 
returns  in  mining  result  principally  from  cheap 
stocks  in  undeveloped  properties  or  from  exploration 
schemes,  provided  they  are  honestly  conducted.  In 
such  ventures,  however,  the  money  is  at  stake  for  a 
great  return  or  a  total  loss;  hence  speculative  min- 
ing stocks  bear  some  resemblance  to  lottery  tickets. 

The  chances  in  mining  are  good,  the  chances  in  a 
lottery  are  almost  nil;  yet  it  is  a  remarkable  fact 


230  MINING  INVESTMENTS 

that  were  the  sale  of  lottery  tickets  permitted  they 
would  be  purchased  at  par  to  the  value  of  millions 
of  dollars  monthly;  while  mining  stocks  offering  a 
better  chance  for  a  great  winning,  as  will  be  shown 
by  the  following  calculations,  are  difficult  to  sell 
even  at  a  big  discount. 

Chances   by   Lottery. 


Scheme  of  the  lottery  as  usually  presented  by  the 
Spanish-American  lotteries.  All  others  have  been 
suppressed  in  America. 

Usually  1,000,000  tickets  of  $1  each  are  authorized, 
although  there  is  little  mention  of  the  number  of 
tickets.  The  prizes  are  put  forward  with  great 
prominence.  Based  on  one  million  tickets  a  tabu- 
lation of  the  chances  would  give  results  as  follows: 

Chances  of  Winning 

Grand  prize 830,000  1  in  1,000,000 

in  100,000 
in  50,000 
in  20,000 
in  2,000 
in  1,000 
in 333% 

4,581  prizes.        Chances  of  winning  i  in  218.2 

The  chance  of  winning  the  capital  prize,  one  in 
1,000,000,  is  so  remote  that  it  is  practically  no  chance 
at  all,  and  the  chances  of  winning  $1,000  for  $1,  one 
in  100,000,  are  scarcely  worth  considering;  while  the 
chance  of  getting  your  money  back  with  perhaps  a 
prize,  one  in  218,  is  so  bad  that  it  is  not  worthy  of 
serious  consideration.  If  mining  stocks  were  offered 
on  a  similar  basis  they  would  be  simply  laughed  at, 
yet  lottery  tickets  are  eagerly  purchased  at  par, 
many  very  intelligent  people  taking  a  chance  on 
them.  It  is  quite  possible  for  a  mining  stock  in  a 


10  prizes  of 1,000 

20  prizes  of 500 

50  prizes  of 100 

500  prizes  of 10 

1,000  prizes  of 2 

3,000  prizes  of i 


AND  HOW  TO  JUDGE  THEM  231 

i 

legitimate  enterprise  not  overcapitalized  to  pay  $30,- 
000  for  each  $1  invested,  and  the  chances  of  winning 
are  better  than  getting  the  capital  price  in  a  lottery: 
more  than  this,  the  chances  for  substantial  returns 
from  a  mining  venture  are  much  better  than  a  lot- 
tery. These  facts  are  logically  indicated  by  the  fol- 
lowing statements  and  estimates: 

It  can  be  claimed  in  reason  and  as  self  evident 
that  there  are  not,  and  have  not  been,  1,000,000  min- 
ing enterprises  in  North  and  South  America  com- 
bined, and  if  it  can  be  shown  that  one  mine  out  of 
them  all  has  returned  $30,000  for  one,  then  the 
chances  of  receiving  such  a  return  are  better  than 
one  in  a  million. 

The  Callao  mine  in  Venezuela  formerly  had  a 
great  record,  though  at  one  time  the  stock  went 
down  to  a  few  cents  a  share.  The  mine  was  to  be 
abandoned,  but  one  of  the  men  believed  in  it,  bought 
stock  at  a  few  cents  a  share  and  worked  the  prop- 
erty himself.  He  subsequently  uncovered  the  fabu- 
lous gold  deposits,  since  worked  out,  but  which  once 
made  the  mine  so  famous  that  a  single  share  was 
reported  to  be  valued  at  $53,000.  I  knew  this  gentle- 
man. Although  he  lost  heavily  in  following  the  de- 
cline of  the  stock,  expecting  new  deposits  to  be  un- 
covered, at  his  death,  not  long  since,  his  estate  was 
appraised  at  $15,000,000,  all  made  out  of  the  Callao 
mine. 

The  Alvorado  mine,  in  Mexico,  shows  how  a  poor 
peon  became  a  multimillionaire  in  a  few  months. 

Comparing  the  chances  for  moderate  winnings, 
who  is  there  owing  a  fortune  to  luck  in  lottery 
tickets,  yet  how  many  thousands  have  made  for- 
tunes in  mining!  This  is  demonstration  that  where 
legitimately  conducted  the  chances  of  a  winning  are 


232  MINING  INVESTMENTS 

very  favorable  to  the  mining  venture  and  very  un- 
favorable to  the  lottery  ticket. 

In  a  lottery  the  chances  of  getting  you  the  money 
back  with  perhaps  a  premium  are  as  one  in  218;  on 
the  same  basis,  a  chance  in  218  mines,  the  average 
result  would  be  that  only  one  would  pay.  No  one 
would  consider  such  a  risk,  yet  this  is  precisely  the 
proportionate  average  to  be  expected  in  purchasing 
218  tickets  in  the  lottery  schemes  used  as  an  illus- 
tration. It  seems  strange  that  the  public  is  so  often 
prejudiced  against  putting  money  in  mining  ven- 
tures even  to  a  moderate  extent.  Those  who  have 
mining  stocks  to  sell,  or  seek  to  organize  private 
mining  ventures,  are  much  to  blame  for  the  develop- 
ment of  this  feeling,  because  they  have  invariably 
compared  mining  stocks  to  investments.  Mining 
stocks  should  not  be  considered  as  investments,  for 
when  compared  they  make  a  poor  showing;  an  in- 
vestment presupposes  security,  and  a  mining  stock 
is  a  speculation. 

To  interest  people  in  mines  explain  the  element 
of  risk  compared  with  the  chances  for  a  profit  and 
let  people  know  what  they  are  buying.  A  mine  can- 
not be  considered  on  an  investment  basis  till  the  ore 
bodies  are  proven  and  the  profitable  treatment  of 
the  ore  has  been  accomplished.  Stocks  in  mines  rep- 
resenting these  conditions  sell  so  high  that  the 
chances  for  great  winnings  are  very  much  reduced 
because  the  winning  has  been  made,  and  naturally 
it  accrued  to  those  who  bought  while  the  mine  was 
an  untried  venture,  as  all  mines  are  at  their  opening. 

Proceed  with  caution  in  considering  mining  ven- 
tures, and  try  your  luck  in  legitimate  enterprises, 
risking  only  what  can  easily  be  afforded  at  hazard. 
Before  staking  any  money,  however,  investigate, 


AND  HOW  TO  JUDGE  THEM  233 

and  remember  always  that  an  undeveloped  mine  is 
not  an  investment  but  a  hazard  for  a  great  winning 
or  a  total  loss.  Mining  is  a  risk,  however,  in  which 
science,  skill  and  experience  can  be  intelligently  ap- 
plied to  great  benefit;  and  under  such  guidance  the 
chances  for  a  profit  are  favorable  to  the  speculation. 
Mining  is  a  speculation,  but  it  is  legitimate  and 
honorable,  and  can  result  in  unusual  profits  to  com- 
pensate for  the  risk.  Wherever  a  mine  becomes  a 
success  it  brings  prosperity,  happiness  and  steady 
employment  to  many  people,  and  one  such  winning 
can  compensate  for  many  losses. 


The  Art  of 
"Wall  Street  Investing 

By  JOHN  MOODY 

This  is  a  practical  Handbook  for  investors, 
treating  the  subject  of  Wall  Street  Investing 
in  a  sensible  and  original  manner.  It  is  the 
first  modern  attempt  to  cover  the  subject  in 
an  attractive  and  popular  form,  and  in  such 
a  way  as  to  be  of  interest  to  the  individual  in- 
vestor as  well  as  the  more  expert  banker  and 
broker. 

"The  book  deals  in  a  clear,  popular  and  en- 
tertaining way  in  the  methods,  terms  and 
phases  of  Wall  Street  Investing,  giving  rules 
for  analyzing  railroad  securities  and  state- 
ments, and  explaining  syndicates  and  reor- 
ganizations."— The  Wall  Street  Journal. 

"It  is  lucid,  original  and  sound.  I  should 
think  it  ought  to  find  use  as  a  text-book  in 
University  and  College  Departments  of  Eco- 
nomics."— Prof.  E.  Benjamin  Andrews. 

."It  is  a  book  of  great  interest  to  business 
men  and  investors  in  general.  Mr.  Moody  de- 
votes a  chapter  to  'get-rich-quick  schemes,' 
which  will  be  an  eye-opener  to  those  e^iileless 
ones  who  are  ready  victims  of  the  great  army 
of  sharpers  that  infest  the  land." — Buffalo 
Courier. 

SYNOPSIS  OF  CHAPTERS. 

I.— Safety  and  Security.  II.— Bonds  and  What  They 
Represent.  III.— Stocks  and  "What  They  Are.  IV.—  Ana- 
lyzing Railroad  Securities.  V. — Industrials  and  Tractions. 
VI.— Investments  vs.  Speculation.  VII.— "  Get-Rich-Quick" 
Schemes.  VIII. — Reorganizations  and  Syndicates.  IX. — 
The  New  York  Stock  Exchange.  X.— Wall  Street  Phrases 
and  Methods. 

The  volume  is  handsomely  printed  and  bound  in  red  doth,  being 
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I 

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The  Pitfalls  of  Speculation 

By  THOMAS  GIBSON 

This  book  deals  exclusively  with  marginal 
speculation  and  analyzes  in  a  clear  and  simple 
manner  the  causes  of  failure  in  speculation, 
with  a  suggestion  as  to  the  remedies.  While 
80  per  cent,  of  the  public  speculators  fail  in 
their  ventures,  the  writer  contends  that  the 
errors  may  be  corrected  and  the  pitfalls 
avoided  by  careful  study  and  clear  understand* 
ing  of  the  machinery  of  the  exchanges. 

In  the  introduction  the  writer  says: 

"  I  do  not  pretend  that  any  'prescription*  can  be 
written  to  insure  success  nor  that  a  majority  of  the 
public  traders  will  ever  succeed,  but  I  do  maintain 
that  many  individuals  capable  of  clear  reasoning 
and  the  directed  exercise  of  such  reasoning:,  are  sim- 
ply moving  in  the  dark  thru  alack  of  understanding 
as  to  what  makes  and  breaks  prices.  More  fallacies 
superstitions  and  distorted  logic  are  connected  with 
speculation  than  with  any  other  business  on  earth." 

Until  the  late  Charles  H.  Dow,  the  founder 
of  "The  Wall  Street  Journal,"  began  to  write 
of  such  matters  there  was  no  literature  extant 
on  the  art  of  speculation  with  especial  refer- 
ence to  the  position  of  the  speculator  of  mod- 
erate means.  Mr.  Dow's  efforts  were  news- 
paper articles,  not  intended  for  book  publica- 
tion. Since  Mr.  Dow,  no  writer  has  appeared 
to  treat  of  these  matters  with  anything  ap- 
proaching the  knowledge  of  the  subject,  the 
breadth  of  view  and  the  common-sense  treat- 
ment that  Mr.  Gibson  devotes  to  it. 

SYNOPSIS  OF  CHAPTERS. 

I. — Introduction,  n. — Ignorance,  Over  Speculation,  etc. 
in.— Manipulation,  IV. — Accidents.  V. — Business  Methods 
in  Speculation.  VI.— Market  Technicalities.  VII.— Tips. 
VIII.— Mechanical  Speculation.  IX.— Short  Selling.  X.— 
What  500  Speculative  Accounts  Showed.  XI. — Grain  Specu- 
lation. XII.— Suggestions  as  to  Intelligent  Methods.  XIH.— 
Conclusion. 

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Smith's 
Financial  Dictionary 

BY  HOWARD  IRVING  SMITH 


Recently  Issued 
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This  work  is  indispensable  to  a  bank  in  an- 
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only  Financial  Dictionary  published.  It  is 
more  than  a  Dictionary,  however;  it  is  like- 
wise an  Encyclopaedia.  It  describes  in  fullest 
detail,  in  clear  language,  Banking,  Money, 
Credit,  Securities,  Contracts,  Commercial 
Paper  and  other  Negotiable  Instruments, 
Domestic  and  Foreign  Exchange,  Speculation 
in  Stocks  and  Bonds,  Grain,  Cotton,  Coffee, 
Provisions,  etc.  It  is  a  complete  financial  li- 
brary in  itself. 

Smith's  Financial  Dictionary  is  adapted  not 
alone  for  banks  and  bankers,  but  for  corpora- 
tions, brokers,  exporters,  importers,  manu- 
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Their  history,  territory,  great  groups  and 
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Their  capitalization,  condition,  recent  im- 
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market  prices,  yield  to  the  investor,  etc. 

This  is  a  work  designed  for  the  Investment 
Banker  and  Broker  and  more  especially  still, 
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Moody's  Magazine 

A  Monthly  Review  for 
Investors,  Bankers 
and  Men  of  Affairs 

Edited  by  Byron  W.  Holt 


Moody's  Magazine  is  published  for  the  information 
of  the  investor.  It  circulates  among  investors 
in  all  English-speaking  countries.  Its  edi- 
torial and  contributed  pages  discuss,  authori- 
tatively and  impartially,  all  topics  of  finance 
and  economics  which  have  a  bearing  upon  In- 
vestments. Its  Studies  in  Value  are  a  dis- 
tinctive feature;  its  Investment  and  Corpor- 
ation News  are  unequaled  for  convenience  and 
completeness. 

It  does  not  suppress  or  color  information; 
it  is  the  organ  of  no  corporation  or  interest; 
it  does  not  publish  advertisements  as  news 
matter;  it  does  not  sell  its  editorial  columns; 
its  editorials  are  fearless  and  truthful,  but  not 
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est with  its  subscribers  and  advertisers,  and 
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Moody's  Magazine 

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The  Cycles  of  Speculation 

By   THOMAS   GIBSON 

Author  "Pitfalls  of  Speculation" 

This  work  is  framed  with  the  intention  of  entering  a 
little  further  into  the  great  question  of  Speculation  and 
Investment  than  did  the  "Pitfalls  of  Speculation,"  by 
the  same  author. 

The  introduction  discusses  briefly  the  difference  between 
mechanical  gambling  and  marginal  speculation  and  shows 
wherein  the  difference  lies.  The  folly  of  expecting  sudden 
riches  from  even  successful  speculative  operations  is  also 
dealt  with. 

The  second  chapter  gives  a  brief  history  of  the  great 
speculative  movements  of  the  last  century  and  analyses 
the  causes  of  such  movements. 

In  the  third  and  fourth  chapters  the  important  questions 
of  our  increasing  supply  of  gold  and  the  influences  of 
money  conditions  on  prices  are  covered.  These  two  sub- 
jects are  considered  particularly  for  their  bearing  on  price 
changes  in  Bonds,  Stocks  and  Commodities. 

In  the  fifth  chapter  such  factors  as  politics,  crops,  etc., 
are  discussed. 

In  the  second  part  of  the  work,  Mr.  Gibson  has  taken 
up  subjects  that  are  not  clearly  understood  by  the  laity. 
The  somewhat  involved  methods  of  operating  on  Puts  and 
Calls  is  explained  in  a  manner  which  robs  the  subject  of 
all  its  complexity.  The  question  of  dividends;  their  in- 
fluence on  prices  immediately  before  or  after  a  disburse- 
ment, is  fully  and  logically  explained. 

Other  subjects  briefly  treated  are:  Basing  Railroad 
Values;  The  Effects  of  Business  Depression;  Undigested 
Securities;  The  Value  of  Rights;  A  Barometer  of  Aver- 
ages; The  Best  Method  of  Trading;  Indications  of  Crises; 
The  Ordinary  Swing  of  Prices;  The  Factor  of  Safety; 
Borrowing  and  Lending  Stocks;  Scalping;  Crop  Damage; 
The  Selection  of  Securities;  The  Bank  Statement,  etc. 

The  conclusion  is  particularly  interesting  to  the  Specu- 
lator. In  this  chapter  Mr.  Gibson  takes  up  and  answers 
the  following  questions  most  frequently  asked  by  specu- 
lators: 

1.  What  margins  are  necessary  to  reasonable  safety? 

2.  Is  it  better  to  study  the  entire  list  or  make  a  specialty 
of  one  stock? 

3.  What  class  of  securities  is  the  safest? 

4.  What  may  be  considered  a  fair  rally  or  reaction  in 
prices? 

5.  What  is  the  best  general  method  of  trading? 

This  volume  is  uniform  with  the  same  author's  "Pitfalls 
of  Speculation,"  and  also  with  the  other  volumes  of  "The 
Investor's  Library." 

Price,  per  copy,  $1.50  net ;  by  mail,  $1.62 
Published  by 

THE  MOODY  CORPORATION 

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